Blogs & Comment

Is Bernanke up to the job?

A recent 11,000-word article in the New Yorker on Ben Bernanke and the financial crisis describes the Federal Reserve chairman as soft-spoken and incredibly quiet, with a retiring manner. His work as an academic at Princeton University is portrayed as statistics-laden and couched in impenetrable technical language. His doctoral thesis was a dense mathematical treatise.
On the other hand, he is described as having a prodigious brain, a tremendous knowledge of past financial crises. Hes a very powerful thinker and in most situations, he is the smartest guy in the room.
The article is definitely worth a read. It gets bit dry in places but sparkles in others. One highlight was the account of Bernankes first meeting with the President and the Vice-President after being sworn in as chairman of the Council of Economic Advisers in 2005:
“After he sat down in the Oval Office, President Bush noticed that Bernanke was wearing light-tan socks under his dark suit. Where did you get those socks, Ben? he asked. They dont match. Bernanke didnt falter. I bought them at the Gapthree pairs for seven dollars, he replied. During the briefing, which lasted about forty-five minutes, the President mentioned the socks several times.
The following month, Hubbards deputy, Keith Hennessey, suggested that the entire economics team wear tan socks to the briefing. Hubbard agreed to call Vice-President Cheney and ask him to wear tan socks, too. So, a little later, we all go into the Oval Office, and we all show up in tan socks, Hubbard recalled. The President looks at us and sees we are all wearing tan socks, and he says in a cool voice, Oh, very, very funny. He turns to the Vice-President and says, Mr. Vice-President, what do you think of these guys in their tan socks? Then the Vice-President shows him that hes wearing them, too. The President broke up.
Past blog posts (from Investing Ideas) on the Federal Reserve and financial crisis:
Getting ready for the next panic(Wed. 22 Feb., 2006) A wilting of U.S. consumers and retail stocks(Fri. 21 Apr., 2006) The Federal Reserve and the Polar Express(Tues. 25 Apr., 2006) Avoid/sell U.S. bank stocks(Fri. 2 Jun., 2006) Daddy, look at the cute mortgage lenders!(Tues 26 Sep., 2006) Banking system risk is climbing(Mon. 9 Oct., 2006)