Monday, January 25, 2010

Once again, if not Bernanke, who?

So I see names out there. I think lots of supporters of Paul Volcker would be disappointed with his policies--he was, after all, the guy who allowed interest rates to rise into the stratosphere in order to break the back of inflation. I actually admire his helmsmanship of the Fed a lot, but I am not sure that many of those throwing out his name understand what they might be getting.

Paul Krugman is certainly more than smart enough and has made remarkably accurate forecasts over the past nine years, and I like his politics a lot--I am guessing I agree with him about 95 percent of the time. But his comments have at times been immoderate--and Federal Reserve Chairs need to have even temperaments. I also would guess he would have a tough time getting confirmed, although I am terrible at political forecasts. As PK also notes, Alan Blinder and Janet Yellin, who would also be good choices, might have tough confirmation battles.

John Taylor, William Poole and Charley Plosser are all smart but are ideologues. I have never seen any evidence that they care in the least about the social costs of unemployment. I suppose Martin Feldstein would be OK, but I am not sure why a Democratic President would nominate him.

In short, I keep coming back to the fact the Bernanke is smart (or, as Krugman says, brilliant), honest, is willing to listen and learn, and has an even temperament. Did he not see the magnitude of the crisis coming? Sure. But neither did a lot of us (I thought the subprime meltdown would be a problem on the order of the Savings and Loan crisis--it was Nouriel Roubini who ultimately woke me up). I just don't see anyone better out there.


Stanley Webber said...

Simon Johnson's take is that the proper candidate does not exist *in the United States*

There's always the extreme solution -- dissolving the Fed. Since it appears to be run by or co-opted by, crooks, what's the downside?

Stanley Webber said...

Correction, (in the Atlantic Q&A) he was talking about someone who could fill the role of Big Bank Regulator:

"Who should regulate the biggest banks?

Great question with no easy answer. You need a tough regulator who can stand up to the banks. Someone who is not captured by their ideology. At this time, we have neither such people nor such an institution in the United States."

For the FedGov he recommended Hoenig from Kansas City