NOW IS YOUR OPPORTUNITY.
GET ON THE PHONE NOW and call your Senators. Tell them:
VOTE NO ON BERNANKE OR YOU'RE FIRED; INSTEAD, BRING BACK PAUL VOLCKER!
What has the financial crisis taught us? Among other things, we should show Bernanke and Geithner, enablers from the previous administration, the door. Paul Volcker is right to ask for a return to Glass-Steagall. It worked until it was eroded over several decades by bank lobbying. Banking and speculative trading activities--even when done for "customers"--don't mix.
"Financial innovation" must be limited, since much of it in recent years was the financial equivalent of card cheating. Banks should not be allowed to sponsor hedge funds and private equity funds, and furthermore, they should not be allowed to lend to them through prime brokerage units or other means. Financial institutions must be allowed to fail. Hedge funds require regulation. Malfeasance should be investigated and prosecuted. Credit derivatives should be traded and cleared through exchanges and made transparent. Compensation and financial incentives at banks must change. Bank employees cannot continue to reap huge rewards at no personal risk while shoving risk into the global financial system.
President Obama promised us change, and he should seize this opportunity to demand sweeping financial reform.
Support is literally crumbling across the board - and it should.
This is not about whether Bernanke "saved the system" - I argue that he did not, in point of fact, in that everything he said wouldn't happen, including the market crash from fall 2008 to spring of 2009, happened anyway even though Congress gave him everything he demanded and more! Further, the only "success" Bernanke's policy has shown is that he blew another asset bubble - this time in stocks where a huge number of issues in the S&P 500 are trading with P/Es over 60 - in clear bubble territory having no relationship of any sort to fundamental value or forward earnings potential. Employment is still in the tank, spending ex-government has not recovered and real-time indicators of forward demand continue to be extremely weak - two years after Bernanke said "he could and would save us."
No, the real reason he cannot be reconfirmed is that he has continued to refuse responsibility for anything related to the mess in the first place, and yet Ben Bernanke has the lion's share of individual responsibility for what has happened.
He has refused to regulate the banks.
He has refused to protect consumers against predatory acts.
He has intentionally grown credit aggregates at a rate dramatically faster than GDP over the space of his entire term and in fact influenced Greenspan doing the same, which is the root cause of the last two bubbles and market crashes.
He has dogmatically stuck to his doctoral thesis even after it has been proved wrong by the passage of time and the market.
He has intentionally concealed the terms of bailouts and handouts that were funneled through the banks on his watch, including but not limited to AIG's bailout that was funneled to Goldman Sachs among others.
He has not supported the market - he in fact became the market for Fannie and Freddie securities, putting himself into a box from which he has failed to explain how he will exit (likely because he now realizes he can't!)
He has been dead wrong in virtually every public pronouncement related to the economy over the last five years, including his repeated claims that there was no housing bubble, that subprime would be contained, that the economy would avoid a recession and that his monetary policies were "supportive" of sustainable growth in the economy. Not one of those claims from 2003-2007 was in fact true.
For all these reasons and more Bernanke cannot be reconfirmed.
We need an adult in the room. While there are others who could do the job, Paul Volcker is the obvious choice. He has proved his willingness and ability to take steps unpopular with the banking cartel when it is necessary, despite the heat that reflects back upon him. He understands the need for separation between the subsidized and protected lending function and speculative activity by financial institutions. And finally, and perhaps most importantly, he understands the difference between sound lending and fraudulent asset stripping and value destruction.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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