Has Bernanke got it right?
Bernanke testified in Congress on Tuesday and one key message was that the recession should end this year.
German fund managers Mack & Weise (M&W), however, were not impressed.
“That Fed Chairman Ben Bernanke once again takes a fundamentally positive view of the U.S. economy should rather be understood as a warning. Not … a single one of Bernanke’s forecasts in recent years has proven right,” M&W said in a note to investors.
Thanks to what fund managers Martin Mack and Herwig Weise describe as a very defensive positioning — almost 60 percent of assets in cash and nearly a quarter in precious metals — their M&W Privat fund with 86.3 million euros ($114.9 million) under management at end-April has delivered a positive return of 8.9 percent so far this year and 10.9 percent over the past 12 months.
“The responsible politicians stubbornly refuse to address the reasons for the crisis,” they said.
“As long as they try to solve a problem of indebtedness by taking on more debt, and with the help of state interventionism prevent the free-market system from getting rid of ramshackle banks or uncompetitive industries, we are far away from any chance of sustained economic recovery.”
Equity investors obviously agree with Bernanke however, pushing the benchmark MSCI world equity index to a 2009 high today on the back of growing expectations that the worst is over for the global economy.
Has Bernanke really been wrong every time? Share your thoughts.