Bernanke to the Fed.

[Manny]

He's no Alan Greenspan, but then again Alan Greenspan wasn't going to be another Paul Voelcker either so you never know. He's a solid monetarist, has impeccable academic credentials and sufficient policy experience and the markets like him. I score this a solid mainstream pick in the mold of John Roberts for SCOTUS.


Now if'n only we can get the President to rethink that whole Miers thing...

Thoughts on Bernanke?

 

[CBL4]

Bernanke was the expected choice and is apparently well qualified.

The favourite at the moment is Ben Bernanke, a respected monetary economist, former Fed governor and currently chairman of Mr Bush's Council of Economic Advisers (CEA). Online betters at Tradesports.com reckon he has a 38% chance of getting the job (see odds above with pictures of the candidates). He is the best monetary economist of any of the candidates and was an unusually high-profile Fed governor. But he has little policymaking experience and has only just moved to the White House.

http://www.economist.com/displaystory.cfm?story_id=5025627

For what it is worth, The Economist found him a little too cozy with Bush and made the following recommendation:

If Mr Bush means what he says about the next chairman being politically independent, then we believe the best choice would be Don Kohn, a governor on the Federal Reserve Board, who is not affiliated to any party. Mr Kohn has another big advantage. As a staff member before being promoted to governor in 2002 on Mr Greenspan's recommendation, Mr Kohn has been attending the Fed's policy-making meetings for almost 24 years, even longer than Mr Greenspan. His vast experience of monetary-policy decisions and financial crises would be invaluable in troubled times. He is highly regarded by economists in the Fed and on Wall Street, and having worked with Mr Greenspan for so long, his thinking on interest-rate policy and financial markets is also close to the chairman's. He would offer continuity and a safe pair of hands.

http://www.economist.com/displaystory.cfm?story_id=5019763

CBL

 

[Manny]

Yeah, I don't get the whole "too close to Bush" thing in this instance. He was at the White House for just few months. If Bush had chosen Hubbard I could see the criticism as justified (though Hubbard would still have been a fine choice).

Kohn would have been fine, except that I haven't got the same sense from him as from some of the other candidates that he wants to increase the Fed's transparency. I think that trend, which Greenspan started a few years ago and which Barnanke had been pushing since the day he got to the Fed, is the right one.

I can see the point of view of the inflation hawks (of whom I'm one), but I think this guy will turn out to be more hawkish in a possible inflation environment than he's being given credit for, his academic chops and early 2000's concerns notwithstanding.

 

[CBL4]

The problem may be more perception than reality. Bernanke could attempt to tilt the economy towards the Republicans. If he gives support to any of Bush's economic ideas, there will always be the thought that it may be a favor to a former boss.

I wish that an independent post like this was appointed by some non-partisan group rather than the president. I would make the same statement about supreme court justices as well.

Having said that, Bernanke seems like a pretty good choice.

CBL