[luvtolean]

http://news.yahoo.com/fc/business/federal_reserve

Bush continues with his buddies. Here's what The Economist (I bought this one overseas, don't know if the US ed was the same) had to say about him:

Originally Posted by The Economist-Oct15-21

The favourite of the moment is Ben Bernanke, a respected monetary economist, former Fed governor, and currently chairman of Mr. Bush's Council of Economic Advisors. (Snip) 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.

Later in the article they mention a less partisan, more experienced, Don Kohn, who was also favored by Greenspan, but Bush of course does not tolerate appointees that won't do what they're told.

[Mo Noyz]

Read that article on Saturday.

Kohn may have been the most ideal candidate for the job(considering how closely he worked with Greenspan), but I don't think Bernanke is a bad choice.

[luvtolean]

Agreed with the couple of articles I've read. Partisan or not, he certainly seems well qualified.

We'll see how it goes.

The markets seem to approve.


Anyone that actually knows about this stuff have an opinion?

[Mo Noyz]

Originally Posted by luvtolean

Anyone that actually knows about this stuff have an opinion?

+1

[Sunbert]

I love listening to Jim Cramer and he thinks this is a good choice, mainly because he's not Greenspan.

[oldfogey]

Two opinions from decent commentators:

"President Bush nominated Ben Bernanke to succeed Alan Greenspan as Chairman of the Federal Reserve Board, effective February 1, 2006. Given the fact that the Chairman of the Fed is arguably the most influential economic policymaker in the world, it is worth assessing what this appointment may mean for the economy and the financial markets.

In the near term, we believe the impact is likely to be relatively small. The long tenure and generally acknowledged success of Fed Chairman Greenspan suggests that a distinctly different approach to policymaking by Mr. Bernanke - at least in the initial phase of his tenure - is highly unlikely. In that vein, following his appointment, Mr. Bernanke himself said that his first priority likely will be to ensure "continuity" at the Fed. Fed policy in the months following Chairman Greenspan's departure thus will be determined more by economic and market performance than by the personality and predilections of the new Fed Chairman. It is worth noting that Mr. Bernanke was a Fed Governor as recently as this past June, and never dissented as an FOMC member. He voted for the last two cuts that took the federal funds rate to 1.0% in summer 2003, as well as the first 175 bp of the current phase of Fed tightening (after which he left the Fed to become Chairman of the Council of Economic Advisors).

While a sharp departure in the policy reaction function of the Fed is unlikely in the near term; similar to his predecessors, the new Fed Chairman undoubtedly will put his own stamp on monetary policy. Mr. Bernanke will be judged ultimately by his actions, and how the Fed reacts to the various economic and market events that will occur during his term."

"Yesterday, President Bush named former Fed governor, Ben Bernanke, to succeed Mr. Greenspan as Fed Chairman. This was not an overly surprising choice, as Bernanke’s appointment as chief White House Economist in May this year was widely seen as grooming him for the leadership of the Fed. Our initial take on the Bernanke appointment is as follows:

1. Bernanke is still viewed by some people as doveish because of his very radical views about the importance of preventing deflation in 2003 (he was the one advocating the renting of helicopters and showering American cities with $100 bills). It was partly under his influence that Greenspan reduced Fed funds to the unprecedented level of 1%. However, this might not be the whole truth. Rather than being a dove he could be said to be a monetary radical. He believes that the Fed should act quickly and aggressively as soon as there is any sign of either deflation or inflation. In the present circumstances, he could favour a quicker and more drastic tightening than Greenspan. In turn, this probably means that the chances of a financial accident (caused by an overly aggressive tightening) will now be higher.

2. In his academic work he has strongly opposed the idea of central banks targeting asset prices. He has written a classic paper demonstrating that a central bank which tries to take stock market or property prices into account will be less successful in stabilizing inflation and unemployment than one which simply targets inflation and tries to minimize unemployment when inflation is under control.

3. Bernanke's academic work also strongly conflicts with the basic assumption of monetarism a la Milton Friedman and the ECB - that central banks should only worry about monetary aggregates and price developments. Bernanke's work has argued, on the contrary, that central banks should react to the broadest possible range of economic indicators (a la Greenspan) and that they should have a reaction function which attaches a lot of weight to real economic indicators such as unemployment or the output gap. Politically Bernanke may be a conservative, but intellectually he seems very much in the Harvard-MIT tradition of macroeconomic fine-tuning, rather than Chicago-school laissez faire.

4. Bernanke is a top-flight academic economist, not a practical policy maker like every previous Fed chairman. This may seem worrying, but recently professorial central bankers (e.g. Mervyn King) have done much better than lifelong central bankers and civil servants (e.g. Trichet and Duisenberg). So that in itself is nothing to worry about."