Is the re-nomination of Ben Bernanke a way to simply reassure the financial markets; to basically avoid any noise by changing the Fed chief? Or, is it an exhibition of a strong commitment on President Obama’s behalf?
Simon Johnson responds on the Washington Post’s live chat :
The goal is definitely to reassure financial markets. The administration likes what Bernanke has done – so far quite complementary to their fiscal approach. Also, many of their nominations (for other jobs) have run into various kinds of difficulties in Congress; why take the risk of that, particularly as the healthcare debate is going to be messy.
Financial systems = number one prority for stability. Once the hysteria over the health care/deficit armageddon is over, talks will resume. One way to do it: a distraction that keeps people calm with the “same ol’ faces”. Ben Bernanke kept markets from complete meltdown by reacting with innovative and timely measures, his re-nomination could just that once more.
A $1.6 trillion deficit in the fiscal year that ends this Sept. 30 … is alarmingly … small …With unemployment and underemployment still rising, consumers still pulling away from the malls, business investment still in the basement, and exports still dead, … the deficit has to be larger in order to get people back to work.