Taylor, NY Times, Dean Baker Call Out Bernanke
by ilene - January 6th, 2010 11:55 am
Taylor, NY Times, Dean Baker Call Out Bernanke
Courtesy of Mish
Bernanke’s hubris, inability to admit mistakes, and his blaming everyone but himself for his mistakes is increasingly starting to touch on nerves.
On Tuesday, the New York Times asked the right question: If Fed Missed This Bubble, Will It See a New One?
In 2005, Mr. Bernanke — then a Bush administration official — said a housing bubble was “a pretty unlikely possibility.” As late as May 2007, he said that Fed officials “do not expect significant spillovers from the subprime market to the rest of the economy.”
The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power. It raises the question: Why should Congress, or anyone else, have faith that future Fed officials will recognize the next bubble?
Just this week, Mr. Bernanke went to the annual meeting of academic economists in Atlanta to offer his own history of Fed policy during the bubble. Most of his speech, though, was a spirited defense of the Fed’s interest rate policy, complete with slides and formulas, like (pt – pt*) > 0. Only in the last few minutes did he discuss lax regulation. The solution, he said, was “better and smarter” regulation. He never acknowledged that the Fed simply missed the bubble.
“We’ve never had a decline in house prices on a nationwide basis,” Mr. Bernanke said on CNBC in 2005.
“The Federal Reserve has unparalleled expertise,” Mr. Bernanke told Congress last month. “We have a great group of economists, financial market experts and others who are unique in Washington in their ability to address these issues.”
Fair enough. At some point, though, it sure would be nice to hear those experts explain how they missed the biggest bubble of our time.
Useless Expertise
All that "expertise" was less than useless. It is amazing how hopeless Bernanke was about housing, about jobs, about the recession, about everything.
Bernanke did not get a single thing right.
Taylor Disputes Bernanke
Please consider Taylor Disputes Bernanke on Bubble, Says Low Rates Played Role.
John Taylor, creator of the so-called Taylor rule for guiding monetary policy, disputed Federal Reserve Chairman Ben S. Bernanke’s argument that low interest rates didn’t