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Some advice for Ben Bernanke

Tuesday, August 07, 2007

Once again we are headed for the cool breeze and much stronger smell of pine trees at higher elevations and will miss whatever excitement develops over the next few days. It's not clear whether that's a good thing or not - we'll see.

Before leave is taken, however, here are a few words of advice for current Fed chairman Ben Bernanke who will prognosticate on the state of the U.S. economy in the FOMC policy statement later this morning.

First, start assigning blame - get political man! The next few months are probably going to be pretty rough and next year might be even worse, so start pointing your finger at the guy who is responsible for all of this.

While you're worried about "inflation expectations", your predecessor is out there managing "blame expectations" and he is meeting with some success.

With images like this - him smiling, you dour - you're 'gonna get blamed for the whole mess if you don't do something about it now.

Feel free to use this cover from last year's "Fed transition" issue of The Economist as a visual aid (note that if the sharp boys on the other side of the pond were just a bit sharper, they'd have written "The Housing Bubble" instead of "The Economy" on that baton.)


Second, consult with a doctor - start laying the groundwork for your departure from the Fed due to some plausible medical condition that prevents you from completing your term. That seems to have worked wonders for others who are in tight spots - not only do you extricate yourself from a horrible situation, but you get a sympathy vote as well. Rare conditions work best.

Third, get some career counseling - it's not clear whether it was hubris or naivete that got you into the mess you are currently in, but before moving on to whatever you do next, go get some career counseling. Since the hubris/naivete problem appears to be common amongst dismal scientists, you may want to consider an entire career change - maybe you can go back to your roots in the public school system with another stint on a school board somewhere.

Lastly, become the complete opposite of Alan Greenspan - between now and the time you flee the Fed, start doing the opposite of what your predecessor would have done. This will help tremendously with the first item above. The idea of "Federal Reserve Chairman George Costanza" was first suggested by Alan Abelson at Barrons and then seconded by Barry Ritholtz at The Big Picture before you were even sworn in, but so far you have failed to take this advice, "What, me regulate?"

You can start today.

Don't give in to the pleadings of Jim Cramer and his ilk - instead of acknowledging the rapidly deteriorating credit situation and hinting that help will be on the way, start saying things like, "Credit excess must be cleansed from the system. It will be painful, but we'll be better off for it in the long run. The markets are working."

This would be the complete opposite of the "Greenspan put".

Do it. Do it today.

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10 comments:

Anonymous said...

you and your blog are a veritable anti-Greenspan juggernaut since the switch back to the original (and much better) name - bravo!

BlueEventHorizon said...

Finally found you again!

How far back do I have to go to catch up?

Yes, technology is grand. Enjoy your mountain time.

Harleydog said...

Terrific post. Nodding the entire read. enjoy the time away !

Anonymous said...

Tim, certainly you've heard of the joke that when one Soviet leader was forced from power, he handed his successor two sealed envelopes. Some day, he told the new leader, you would get into a political situation that you don't know how to get out of, and then you should open the first letter. This time eventually came and the leader opened the first letter. It read, "Blame everything on me". It worked, and he was saved. Years later, the time came again when he found himself in a political mess, and so he opened the second letter. It began, "Sit down. Write two letters..."

One wonders, what Greenspan left to Bernanke?

Anonymous said...

I think Ben may just follow the Volcker model and be the adult in charge we so desperately need in this society.

I hope so.

Or else he can just warm up the helicopters now.

Anonymous said...

Check it out Tim! On the MSN.com homepage next to the "Fed leaves rates unchanged" headline, there's a thumbnail of Bernanke with a HUGE GRIN on his face. First time I've seen anything like it. I guess they DO read your blog!

HoosierDaddy said...

The WSJ woodcut makes Greenspan look a bit doddering. "Once I was in charge of the Federal Reserve, and now I like to sit in the park and feed Squirrels. Do the young people like to feed Squirrels?"

Anonymous said...

I like this image of greenspan best

http://money.cnn.com/2005/06/01/news/economy/fed_bonds/greenspan_yoda.03.jpg

instead of using the force, this yoda uses easy money/credit

I agree with above poster - so far impressed by Bernanke. Hopefully he cares more about the country than his image and doesn't cave into the financial sector piglets.

Anonymous said...

Alan Greenspan is a political hack ... another name for scamster.

Anonymous said...

Tim, I think Bernanke is taking the opposite track from Greenspan as evidenced by the Fed statement released yesterday. They did not even signal a switch to a loosening bias which means they'll likely have to burn at least one more meeting to do so. Furthermore, Bernanke is allowing his minion Poole to make pronouncements such as "investors in CDO's got what they deserved." There is no evidence (yet) of a Bernanke Put.

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