Why is Bernanke pushing another stimulus when Paulson’s banks plan has only just begun?
Last week before Congress Bernanke said the following:
Now, did you ever hear the saying “the cure is worse than what ails you”? I get that things aren’t that great. I gt that thew Fed and Treasury feel the needed to do something. I get something has to be done.
But, when you have a near trillion dollar plan that has only just begun to take effect, ought not we wait just a bit and see how it works before we go pump another 1/2 trillion or so of taxpayer money into the system?
Isn’t the current complaint from both the left and the right of the political spectrum of his predecessor Alan Greenspan that he interjected himself into fiscal policy? won’t this backfire as foes from wither party will now use this decision against him and perhaps constrict his ability to use his powers in the future?
Bernanke has gotten broad authority from Congress in order to deal with the current crisis. One can argue whether of not he has used it wisely or should it have been granted to him but it was and he has mitigated what could have been a far worse scenario. The problem with what he is doing now is that he will become the fall guy for either party for anything that goes wrong from here. Should the stimulus not work, he will be accused of wasting taxpayer money for no result. Should its relief only be temporary (like that last one’s was) he will get accuse acting for the sort term, not what is best for the country long term.
No one is saying they think a stimulus will “cure” what ails us so Ben’s backing of it has no real long term positives for him.
Ever hear the saying “give a man enough rope to hang himself”. Congress just did it to Ben, he took the, rope and now they have their fall guy.
Much of what the Fed can accomplish is based on what people thin of the institution and its leader. The general perception of Ben is that he has done a great job thinking outside the box recently and has saved us from much worse. That gives markets some degree of confidence we will get though this.
When Congress takes his forray into their domain and uses that as a reason the cast blame from themselves to him, his ability to calm Main St. or the Markets (.INX) ,(.DJI) in the future will be severely restricted.
That is far worse than whether or not any stimulus is a good idea…..it isn’t by the way..