He is not quite the loneliest man in the world, but Fed chairman Ben Bernanke must be feeling in need of a friend these days. First those nasty Tea party types stormed the capital with their distinctively un-Fed-friendly views. Dismiss them as extremists if you will, but they seemed to have been joined by an array of world leaders in their criticism of quantitative easing, the Fed’s purchases of U.S. government debt in an attempt to stimulate the economy.
The rest of the world fears the Fed’s action amount to a backhand form of competitive currency devaluation. Many Republicans fear the Fed is enabling profligate U.S. budgetary policy. Even Fed governors and regional presidents are uneasy. Governor Kevin Warsh warned on Monday the Fed was not “a repair shop for broken fiscal or regulatory policies” and that the Fed could lose its “hard-earned credibility – and monetary policy can lose its hard-earned sway – if its policies overpromise or underdeliver.” Dallas Fed Reserve Bank President Richard Fisher then chimed in, calling quantitative easing “a bridge loan to fiscal sanity.”
In the end, the effects of the Fed’s latest move on economic growth may not be that dramatic. Its effect on the Fed’s long-term credibility, though, are less clear, and perhaps more worrying.
Finally today, hats off to the New York Times’ Norimitsu Onishi, whose research into Obama’s childhood in Indonesia threw up some unexpected gems. The future president, a chubby kid known as Barry, was apparently also referred to a “the boy who runs like a duck.” His nanny, an openly gay man, had an affair with the local butcher before running off to join a group of transvestites known as the Fantastic Dolls. But however unconventional his upbringing, even then Obama seemingly had leadership qualities.
Once, Onishi reports, Obama asked a group of boys whether they wanted to grow up to be president, a soldier or a businessman. A president would own nothing while a soldier would possess weapons and a businessman would have money, the young Obama explained.