Chris Whalen On Bernanke: Person Of The Year, My Foot! He Has Made A "Pig's Breakfast" Of The Economy

Video with transcript:  Chris Whalen with Aaron Task at Tech Ticker -- Bernanke gets throttled

Ben Bernanke has been named Time's "Person of the Year," for his aggressive actions to stem the global financial crisis.

• "His creative leadership helped ensure that 2009 was a period of weak recovery rather than catastrophic depression, and he still wields unrivaled power over our money, our jobs, our savings and our national future," Time's Michael Grunwald writes. "The decisions he has made, and those he has yet to make, will shape the path of our prosperity, the direction of our politics and our relationship to the world. "

Bernanke was clearly at center of the government's response to the financial crisis and remains "the most important player guiding the world's most important economy," as Grunwald writes. By his own admission, the chairman didn't see the credit crisis of 2008 coming and was too slow to react. Still, all but his most strident critics agree Bernanke helped prevent an even worse outcome, possibly a second Great Depression.

But does Bernanke deserve to be "Person of the Year"?

• "Absolutely not," says Christopher Whalen, managing director of Institutional Risk Analytics. "On a personal level I have great sympathy for Chairman Bernanke but he's made such a pig's breakfast of this whole situation."

Unlike those who praise Bernanke for bringing the economy back from the brink of the abyss, Whalen says all he's done is "saved the dealer community" from themselves by overseeing a massive taxpayer-funded bailout of the financial community.

• Bernanke "hasn't done anything for the real economy," the analyst says. "The only thing I see is inflation. For the average American the message they should take away from this year is this: Bernanke's policy has ensured we'll see the purchasing power of Americans' savings dwindle."

A former staffer at the New York Fed, Whalen also says Bernanke "failed miserably" in maintaining the Fed's independence from both the banks and from politics.

Rather than merely lending money to the Treasury, Bernanke put the Fed directly in the middle of the 2008 bailouts - most notably of AIG, Whalen recalls.

• "By taking the lead [Bernanke] undermined the Fed's independence," he says. "He really intervened not so much in the financial markets but in American politics. He gave Bush and Paulson a pass -- they didn't have to take responsibility for the crisis and they hand[ed] the ball to Barack Obama."

It is for these reasons, Whalen says, that Bernanke's reconfirmation by Congress is not assured, and politicians on both sides of the aisle are looking to reign in the Fed's power. It's ironic Bernanke is being lauded in the mainstream press at a time when he -- and the institution he leads -- are under so much pressure in Washington.

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Comments

[RecoverylessRecovery]

Chris's response to the question "is Bernanke gonna be re-confirmed?" (@3:53) clearly indicated our elected representatives have a continuing policy of SAYING the right thing ..and then DOING the exact opposite;

"I think right now, yes! But I'll tell you, every member of the senate who is running for re-election next year would *LIKE* to vote no".

[DailyBail]

rlr...it's a fucked up system undoubtedly...the question snk has posed as well as others is:

is it so polluted at this point that we need to start over...or can it be fixed...

i think 'fixing' starts with lobbying reform...and term limits...but i'm still extremely doubtful...

[RecoverylessRecovery]

Well DB, I think 'fixing' most probably would REQUIRE 'starting over' at this current point in time. The REAL problem though before even going there would be obtaining some consensus first. You for example suggest lobbying reform and term limits as starting points. Excellent ideas both, yet many OTHERS prefer to focus on issues such as health care or pensions instead. Still OTHERS discuss the need for deep financial reform as the way to begin to solve our current crisis. And MOST Americans are -sadly- not even AWARE of the dire situation this country is in nor do they understand how we have literally painted ourselves into a corner financially. All of which makes us the American taxpayers RIPE for 'divide & conquer' tactics by the likes of Goldman et al.

I personally think ALL the aforementioned schools of thought (except the School of the Oblivious, of course) has got it right at least in part. And THAT'S what's so worrisome; that we've allowed ourselves to deteriorate to such a LOW that we now find ourselves in DESPERATE need of MAJOR overhauls to mostly every one of our major institutions. And all this at a time when we are being led by a president who can't be trusted to stand-up to ANYONE.

YOU do the math and tell me how we're NOT Argentina.

[DailyBail]

good points...mine was that if you fix lobbying then MANY of the other problems automatically disappear...i think it's the root cause for voters having lost control of their own elected leaders....

[RecoverylessRecovery]

Agreed. Tackling lobbying abuse successfully would go a loooooong way towards resolving numerous issues. I'm sure Barack will prioritize it accordingly.

NOT!