The Day of Reckoning Comes: Ben Bernanke Has Officially Lost His Mind
If I were more of an asshat myself, I might tell you that Bernanke is completely insane and should be committed before he can cause any more destruction while he's being choked by mania. Since I'm not as much of an asshat as I appear to be, I remind dear reader that the poor bastard has a pretty awful job and, like OMG Obama, inherited a pretty awful set of circumstances with the expectation that he'd be able to turn things around. How's that working out for you?
I haven't seen this side of Bernanke and have to say it's pretty frightening. Entertaining, of course, but frightening.
Call me crazy (even though he's the one who has obviously gone nuts) but I don't think overstepping the Fed's limited authority and threatening nations who have their shit together is going to get us very far.
Check out his comments from Frankfurt today:
The global economy is now well into its second year of recovery from the deep recession triggered by the most devastating financial crisis since the Great Depression. In the most intense phase of the crisis, as a financial conflagration threatened to engulf the global economy, policymakers in both advanced and emerging market economies found themselves confronting common challenges. Amid this shared sense of urgency, national policy responses were forceful, timely, and mutually reinforcing. This policy collaboration was essential in averting a much deeper global economic contraction and providing a foundation for renewed stability and growth.
In recent months, however, that sense of common purpose has waned. Tensions among nations over economic policies have emerged and intensified, potentially threatening our ability to find global solutions to global problems. One source of these tensions has been the bifurcated nature of the global economic recovery: Some economies have fully recouped their losses while others have lagged behind. But at a deeper level, the tensions arise from the lack of an agreed-upon framework to ensure that national policies take appropriate account of interdependencies across countries and the interests of the international system as a whole. Accordingly, the essential challenge for policymakers around the world is to work together to achieve a mutually beneficial outcome--namely, a robust global economic expansion that is balanced, sustainable, and less prone to crises.
The problem, it seems, is that economies that used to be dependent on cheap American money and our insatiable hunger for crap we couldn't afford have broken free of our leash and are now making us look like a bunch of lazy losers who can't fix our perpetually broken financial system. Bernanke seemed totally cool with the whole thing when everyone was screwed but now that we (and Europe) seem to be the ones with more issues than National Geographic while emerging economies are thriving, he's broken down and is lashing out. Naturally. Peep the chart:
Who knew Ben Bernanke was in a position to dictate to other countries how they deal with their own economies? I didn't see the Federal Reserve jumping to accommodate everyone else when they were busy inflating the last bubble but that doesn't matter now, it's about what the Fed wants, right?
What is clear is that the different cyclical positions of the advanced and emerging market economies call for different policy settings. Although the details of the outlook vary among jurisdictions, most advanced economies still need accommodative policies to continue to lay the groundwork for a strong, durable recovery. Insufficiently supportive policies in the advanced economies could undermine the recovery not only in those economies, but for the world as a whole. In contrast, emerging market economies increasingly face the challenge of maintaining robust growth while avoiding overheating, which may in some cases involve the measured withdrawal of policy stimulus.
Oh and don't call QE 2 QE, you heathens. Crazy Ben doesn't like that.
Incidentally, in my view, the use of the term "quantitative easing" to refer to the Federal Reserve's policies is inappropriate. Quantitative easing typically refers to policies that seek to have effects by changing the quantity of bank reserves, a channel which seems relatively weak, at least in the U.S. context. In contrast, securities purchases work by affecting the yields on the acquired securities and, via substitution effects in investors' portfolios, on a wider range of assets.
Who is this guy? Certainly not the Gentle Ben I've come to know and loathe over the last two years. Go, ZB, go!!