Thursday, July 14, 2011

Finally, Candor From the Fed Chairman

In congressional testimony yesterday, Ben Bernanke admitted that "We don't know where the economy is going to go."  I nearly dropped the newspaper as I read that.  What a contrast to the days of Alan Greenspan, who was considered an oracle despite his mediocre record as a private economic forecaster and consultant.  

Perhaps the financial crisis of 2008 humbled Mr. Bernanke a bit, along with the knowledge that not much has changed as a result of the crisis.  Wall Street and banks still call the shots, no major financial figures have been prosecuted for fraud, regulators still overlook huge systemic risk factors, financial firms are still insufficiently capitalized, etc.  And the Fed stands ready to prop up markets and the economy with artificially low interest rates, and who knows, buying of stock futures when stock prices decline more than a squiggle.

Steve Lehman

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