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  1. #1
    tommywho70x Guest

    Bush nominates Greenspan successor

    Other than instinctive bad feelings about a private banking group managing a fiat currency, our money supply and interest rates, this is way outside my own knowledge and i'm curious to see what you folks with more expertise in money matters in both the GEO-LIB and NEO-CON peanut galleries have to say about this latest Bush appointment


    Posted 10/24/2005 10:53 AM Updated 10/25/2005 2:09 AM

    Bush's Fed pick ensures stability
    By Sue Kirchhoff, USA TODAY
    WASHINGTON — President Bush Monday nominated Ben Bernanke, a widely respected 51-year-old economist with impeccable academic credentials but limited Wall Street and government experience, to succeed Alan Greenspan as chairman of the Federal Reserve.

    Bush made the announcement, one of the most important of his presidency, in the Oval Office flanked by both Bernanke and Greenspan. The ceremony was a clear effort to reassure markets worldwide that his choice means policy cohesion rather than radical change.

    Underscoring that point, Bush called Bernanke, chairman of the White House Council of Economic Advisers and a former Federal Reserve governor, "the right man to build on the record Alan Greenspan has established," while citing Bernanke's sterling academic and international reputation.

    For his part, Bernanke promised that, if confirmed to the world's most prominent economic post, his first priority will be "to maintain continuity with the policies and policy strategies established during the Greenspan years."

    The iconic Greenspan, 79, who has steered the Fed for 18 years through financial crises and a historic expansion, is set to retire on Jan. 31.

    Greenspan will leave an economy growing at a healthy pace, despite blows from Gulf Coast hurricanes. But the next Fed chairman will quickly face a number of difficult issues, including growing inflation and high energy prices, the forecast slowdown of the red-hot housing market, and historically large trade and budget deficits. If confirmed, Bernanke likely will also have to decide, with other Fed officials, how and when to wind down the central bank's 16-month campaign of raising interest rates.

    In brief remarks in the Oval Office, while his wife, Anna, and two grown children looked on, Bernanke promised that, if confirmed, "I will do everything in my power ... to help to ensure the continued prosperity and stability of the American economy."

    Greenspan in a statement praised Bernanke as a "distinguished appointment."

    While the White House is under political attack for nominating an insider, Harriet Miers, to the Supreme Court, Bernanke is hardly an administration crony. Formerly chairman of Princeton University's economics department, Bernanke has held his White House job only since June 21 — a move viewed by such economists as Rich Yamarone, director of economic research at Argus Research, as a tryout for the Fed job.

    Lawmakers said they expect a vote on Bernanke before the Senate adjourns this year, though he is likely to get some tough questions about White House economic policy, including large deficits.

    "I would hope that we can dispose of it quickly, but we're not going to rubber-stamp any hearing," Senate Banking Committee Chairman Richard Shelby, R-Ala., who supports Bernanke, told reporters. "I am sure (it will be) a protracted hearing."

    Bernanke became one of the most influential members of the Fed during his 2002-05 term on the board. He gave groundbreaking speeches on possible Fed options to combat deflation, a sustained downward spiral in prices, and posited that a worldwide glut of savings was contributing to the soaring U.S. trade deficit. He has favored setting an explicit target for allowable inflation, a policy opposed by Greenspan and some current Fed members who worry it could limit flexibility in reacting to changing economic conditions.

    But, like the current chairman, Bernanke has said the Fed should not use interest-rate policy to try to pop speculative financial bubbles.

    Bernanke is also an advocate of greater openness at the traditionally secretive Fed, including giving the markets a better sense of future Fed policy. The Fed has been moving in that direction already under Greenspan and recently decided to more quickly release the minutes of interest-rate meetings.

    In an interview last year in a Minneapolis Federal Reserve publication, Bernanke conceded there were limits to the policy, saying he did not support televising Fed proceedings or releasing certain internal economic forecasts.

    A tough act to follow

    Bernanke faces a tough job as successor to Greenspan, who was praised recently by Princeton economist Alan Blinder as the most successful central banker in history. Greenspan was also able to navigate the political winds in Washington, while unifying Fed members around policy decisions — skills Bernanke will quickly have to demonstrate.

    The Fed, which has a dual role of fostering stable prices and maximum employment, plays a vital role in managing the economy. Fed officials set short-term interest rates, which determine interest rates on consumer and business loans. The Fed regulates banks, manages the money supply and performs crisis management after such disruptions as the Sept. 11 terrorist attacks.

    Increasingly, Greenspan became involved in issues beyond the Fed's purview, providing advice on tax and regulatory policy. Because the U.S. economy is so large, Fed decisions influence living standards worldwide.

    Bernanke has compared monetary policy to driving a car "that has an unreliable speedometer, a foggy windshield and a tendency to respond unpredictably."

    Stock prices rose after the announcement, though bond prices declined as traders worried Bernanke might not be as hawkish on inflation as Greenspan. Bernanke has suggested that he favors a range of 1% to 2% at an annual rate for core inflation, which doesn't include food and energy prices. Core inflation is currently running about 2%, though Fed officials in recent speeches have said they are worried that inflation pressures could intensify, given rising energy prices after Hurricane Katrina.

    Bernanke told Congress' Joint Economic Committee last week that he thought overall inflation was likely to return to levels consistent with more stable prices in coming months.

    Economists at Bear Stearns said they did not see Bernanke as someone who would be weak in fighting inflation. However, Ian Shepherdson of High Frequency Economics said some of Bernanke's past statements on inflation had unnerved markets, and "Mr. Bernanke will have to earn his anti-inflation stripes."

    The transition from Greenspan, a revered presence, to an unknown chairman could unsettle markets.

    "There's little doubt in my mind that Bernanke got Greenspan's endorsement. I think Greenspan had veto power over the pick," says Greg Valliere, chief strategist at Charles Schwab Washington Research Group. "The Harriet Miers (nomination) has been such a fiasco that it couldn't be anything exotic."

    The Senate should uncover no unwelcome surprises in Bernanke's background, because he has already gone through the Senate confirmation process three times for his Fed and White House appointments.

    Sen. Jim Bunning, R-Ky., however, said he would oppose Bernanke, because he did not dissent from Greenspan on policy votes during his time on the Fed.

    Senate Democrats view the nomination at least partly as a chance to debate Bush's record. Sen. Charles Schumer, D-N.Y., has already asked Bernanke to clarify statements he made in support of extending some Bush tax cuts. Schumer, in a statement, said Bernanke told him Monday that he was speaking about taxes only in his White House capacity.

    Senate Democratic Leader Harry Reid of Nevada offered a qualified endorsement, saying, Bernanke must show that "he is committed to guiding the economy to produce results for all Americans rather than promoting partisan policies that benefit special interests and an elite few."


  2. #2
    tommywho70x Guest

    Re: Bush nominates Greenspan successor


    Influential Fed member

    Bernanke was raised in Dillon, S.C., where his father was a theater manager and pharmacist, and his mother taught school. In an interview with New Jersey's The Star-Ledger several years ago, Bernanke's mother said he won the South Carolina state spelling bee in 1965 but got stuck on the word "edelweiss" at the nationals. She blamed the slip-up on the fact that the movie version of The Sound of Music, which has a song about the flower, did not reach their town.

    Bernanke taught himself calculus because it wasn't offered at his high school, aced his SATs and once worked at South Carolina's South of the Border, a sprawling tourist complex and theme park on Interstate 95. He earned a bachelor's degree with highest honors from Harvard in 1975 and a doctorate in economics from the Massachusetts Institute of Technology in 1979.

    Bernanke taught at Princeton and was chairman of the economics department when tapped by Bush in 2002 for a seat on the Federal Reserve Board of Governors. He has extensively studied the causes of the Great Depression — and the Red Sox during his time in Boston. Prior to joining the Fed, his only government experience was two terms on the Montgomery Township, N.J., Board of Education.

    Bernanke quickly became one of the most influential members of the Fed, giving a series of provocative, clearly written speeches. Within the Fed, Bernanke was described as a quiet academic who could be a sharp debater on policy but was accessible to staff economists, eating in the central bank's cafeteria and discussing policy. A number of Fed staff economists were his former students.

    An exhaustive search

    The White House said Monday's announcement was the culmination of an exhaustive search that began in late April and included an initial list of more than 20 possibilities and interviews with several candidates. Vice President Cheney was involved in the selection process, and Greenspan was consulted.

    Bush called Bernanke from Air Force One on Friday afternoon to discuss the job and made a formal offer at 7:15 a.m. Monday.

    While the nomination was generally praised, some economists warned that Bernanke had the wrong qualifications. Greenspan, long a private-sector analyst, pores through reams of disparate data to figure out where the economy is heading. Argus Research economist Yamarone worries that Bernanke, with his academic background and lack of direct business experience, might be more dependent on models and less willing to sift through detailed reports.

    Getty Images

    "Despite Bernanke's sharp macroeconomic intellect, we're afraid that he may not be able to conduct monetary policy with the virtuosity of a maestro," Yamarone said.

    Several economists said they expected the Fed, which has raised short-term interest rates to 3.75% from 1% since June 2004, to continue its tightening policy through the end of Greenspan's tenure. That could put it close to the Fed's goal of getting interest rates to a neutral point that neither overstimulates nor slows economic growth.

    "This will take some pressure off of the new chairman," says Steven Wood of Insight Economics. "However, there are a number of other macroeconomic problems — the housing 'bubble,' high energy costs, low national savings, the gaping current account deficit, to name a few — that will surely test the new Fed chairman's mettle."

    Contributing: Judy Keen

    © Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

  3. #3
    Join Date
    Sep 2004

    Re: Bush nominates Greenspan successor

    all ho! ho! ho's if ya ask me!!gimme the good life and i'll sell my soul!! :eek: :eek: :p

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