There is this paralyzing fear that the next Great Depression is knocking at the door. For politicians to open the door to free-market anarchism is just as bad as a foot inside the door for Obama’s ideological economics.
Austrian school is attempting a rescue operation. But the timing is poor. It starts with activist politicians trying to take over the Federal Reserve and like Masters of the Realm, run the economy.
You may disagree, but I want to say it one more time: More serious troubles loom ahead if Ben S. Bernanke is not reappointed Chairman of the Federal Reserve when his term expires. Recent wires indicated President Obama has reappointed him to the Fed. But there is nothing to celebrate yet until politicians in Congress who do not only want to kick his behind but also abolish the Federal Reserve, confirm his appointment back to the Chair.
Radical free-market reformers whose misplaced nationalism mimics the Austrian school of thought to the point of embarrassment – a number of them is in Congress – and whose liberal economic philosophy textbooks criticized as leaning towards chaos and anarchy, is expected to destroy the Federal Reserve they hated deep down the marrow of their bones even if the result would ruin the country.
In the guise of “audit”, garrulous political r3bels in Congress who are always politically correct in their attempt to win support and patronage of the masses like how Romeo tragically pursued Juliet in Shakespeare’s Magnum Opus, but have no idea at all how the economy works, want to take over by making the Federal Reserve their political punching bag. When this happens, we will be witnessing a very costly wrestling spectacle in the House and in the Senate as soon as the takeover is complete … a new mode of public entertainment the cost of which is going to be paid by blood and suffering we have never experienced before!
If you think those no good politicians would care about the catastrophic outcome when they politicize the economy [they are playing with fire] – except perhaps see them shed crocodile tears in public when you lost your mortgage to crossbones bandits of the banking system -– you must be this bronco who doesn’t know where his bloodline came from, whether from a stupid talking elephant or a donkey that is kicking mad like hell.
At FP.com, I have reported just a few weeks ago that noted economists are at loggerheads over this critical issue of whether or not Bernanke should stay as Chairman of the nation’s Central Bank. The short and long term effects of Bernanke’s retention or departure cannot be overemphasized.
Economist Paul Krugman, recipient of Nobel Prize award and respected economist Nouriel Roubini are very vocal for the need of Bernanke’s reappointment, while Joseph Stiglitz, another Nobel Prize honoree and Anna Schwartz, also a well-known economist, are against it, for the simple reason that a more transparent activist reformer, possibly a libertarian protégée, should run the Federal Reserve for a change.
In my previous editorial report, I was quite uncompromising if not somewhat condescending – excuse me … have a space and bear with me -- in maintaining that the need for Bernanke’s reappointment is imperative if we want to save this country from catastrophic collapse. I state this analytical advisory without a shade of doubt, and with empirical support.
In this economic discipline, I have been talked down many times in so many debates inside and outside of the academe as a fish in the water to catch, cook and chew at the dining table. In the case at bar, knowing the critical task ahead to be done and/or knowing what the Chairman of the Federal Reserve needs to do, and aware of Krugman’s analytical acumen in identifying the cause/s of the problem in times of economic crisis, and finally, familiar with the philosophical posturing of his nemesis from the Austrian school of thought that I have written a lot about in the past, I am inclined to take side with Krugman and Roubini for Bernanke’s retention or continuance in office -- the chairmanship of the Federal Reserve.
The public had read my position on this issue. To be sure that it is not easily doubted or forgotten, it is necessary to restate it here in unmistakable terms: There are cogent reasons why Bernanke should stay as head of the Fed – and I even don’t like the guy for being so soft when bullies kick him around:
[a] Again, in this economic discipline, Krugman and I and the rest honed by the academe to know how the economy works, are aware that so far Bernanke who was formerly chairman of the economics department, Princeton University, is the only man known to be and to me – at least on my part the only scholarly candidate that I knew -- fit for the job in terms of academic training, working knowledge, qualification, time and priority. There is no time to experiment what the newcomer can or would do to confront the danger that stalks the economy like a ticking time bomb. Bernanke has the required academic know-how, state-of-the-art training and expertise to disarm this bomb before it explodes to a catastrophic conclusion we might not be able to survive.
[b] I have been following Bernanke’s responses to the financial crisis. I noted that he used his wisdom in applying the principles of fiscal and monetary magnitudes for economic recovery that could only be learned from the higher science of economic discipline. The strategy employed is aimed at controlling fear and panic as a matter of utmost priority … “to slay the dragon under our bed” [this monster refers to this financial meltdown that dangerously threatens to engulf the U.S. economy]. There is no greater danger when Americans are in panic than panic itself. Pandemonium will kill more than the flame will turn to ashes, the moment someone cries out loud that the theater is on fire even though it is not!
[c] When politically and ideologically motivated criticisms of moderate cynics as well as radical Fed-bashers -- ignorant leftists, left-leaning politicians, media mercenaries and street activists -- are dumped on him like a pile of garbage, Bernanke remained polite and clean in spite of these emotionally violent distractions, and stays focus on his job. Even though this kind of attitude disturbs me because his duty as chairman of the Fed is to tap the ignorant on the head, I must admit that a solid quality of professionalism of this kind is rare and hard to find. Obama will not be able to find a substitute of this kind within the critical timeframe required had he decided for a replacement instead of reappointment.
I surmise that like any concerned economist Krugman knows as well as I do, that Bernanke knows quite well what needs to be done.
But the opposition, notably made up of leftists, radical liberals and activists – most of them not necessarily armed with the economic knowledge required but only propelled by insuperable anger -- wants a new man in the Fed that would alter the central banking system in accordance with the dictates of the Austrian school of thought.
It is a bad move for such a discordant timing … not now. Maybe sometime in the future, there will be a need for tinkering the system or a need for such deviation from the norm, but not at this time when Bernanke has already engaged the problem and should continue to do so.
Perhaps it is okay to change the rules in the middle of the game if we are losing, if not for the fact that Obama is hankering for a radical change. Obama is on his way to socialism … this we know, but he shouldn’t arrive there by turning the country into a graveyard once bedlam caught up with the troubled economy and the result is worse than depression where people, thrown to hopelessness and extreme desperation, would kill themselves, their love ones, their family, even before killing each other! When we want to be reminded of this sad reality, history speaks out loud and clear.
Even staggering under a tremendous pressure coming from the middle, the left and the right forces of the realm, this former head of the economics department of Princeton University did not allow the corporate pillars of the economy to fall. Instead, he rescued, among others,“Bear Stearns Cos. and American International Group Inc. last year while backing the creation of the $700 billion Troubled Asset Relief Program.” It slowed down the downturn, and now it is reversing and recovery although still slow, is in sight.
If you have an issue on this eye-opener that the Media had reported fair or foul, I am sure Bernanke would say this to you: Make my day!
Did I like Obama’s overall economic rescue package? No I did not. I did not like it in the sense that it came out of the drawing board full of holes, as easily seen by most economists worth their salt … that is, if it was deliberately studied at all! But an economy that is financially drying up faster than the bullet train on its way down to hell needs an immediate blood [financial] transfusion. This is given in both economics and medical sciences when a rescue operation is being done inside the hospital’s emergency room or ICU.
The rapidly failing system was almost in a coma and Bernanke conducted a rescue operation; he is a doctor of economics. He knew what he was doing.
Just imagine that instead of Bernanke a riveting politically-correct politician was in-charge! The blame on our economic collapse would have been the season’s football kicked across the aisles and caught by politicking politicians … as usual to win the people’s back-patting standing ovation.
Notice that in politics, those scheming celebrities in our political firmament -- too sleek for their sales talks that even Eskimos in the North Pole would buy a dozen of refrigerators they are peddling – would claim that while their hands are at each other’s throat, they are faultless, blameless and clean. The Media they bought would launch a coordinated campaign to hoodwink the public that in Congress they are doing a wonderful job for the country.
In a democracy like what we grudgingly want to have and gingerly criticized more often than not, I think you and I have been around quite long enough to know more than enough about this crack in the glass of our entire political system. That sooner or later this glass is going to break when politicians pushed it to the edge of the breaking point -- whether this push be too far to the left or to the extreme right – has never occurred to me as just a figment of the imagination which others would assume or tend to believe. The tired and stupefied public could snap back to this harsh reality any time of the day.
I do not necessarily have a bee in my bonnet but in my preoccupation, it is easy for me to realize with a profound meaning the answer to the question as to why politics and economics are strange bedfellows. Where politics begins, economics ends. But where economics begins, politics is supposed to end, otherwise there is no economics to start with when politicians take over the economy … for instance, starting with the capture of the Federal Reserve by a howling pack of wolves in Congress.
From several dissertations and position papers on economics and politics that I have written in the academe, in the Media and in the UN, and out of knowledge and experience inside and outside of the United Nations’ economic and social commission for Asia and the Pacific for more than a decade where economics is internationally politicized, I am confident of what I have learned and lived for in macroeconomics that was once my bread and butter. Had Bernanke allowed big corporations to collapse in the middle of the financial crisis as a radical liberal chairman of the Fed who hates the banking system would have allowed, it would have brought down the whole economy with it. The fact that millions of Americans believed that Obama does not know what the terrible impact of this kind of omission would be to the country, he would have cared less anyway and you can mark this in stone.
But the truth is, even the public hardly knew that what Bernanke was doing was using a textbook economic approach in confronting the problem primarily aimed at avoiding not just a recession but a dangerous depression. “I was not going to be the Federal Reserve chairman who presided over the second Great Depression.”
To the open-minded, this public declaration sounds like a pledge. To decipher what this means, we do not need a diploma in the study of advance economics to mock Obama’s worsening socialist economy, more so when we hear the next Great Depression knocking at the door.
It is such a very bad timing if know-nothing and good-for-nothing politicians are to run the economy by first taking over the Federal Reserve. #
© Copyright Edwin A. Sumcad. Access FP.com August 25, 2009.
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