Credit: Shutterstock photoBrad DeLong submits:
Paul Krugman worries about his friend Ben Bernanke:
And immediately after I see this:
In my view, Ben Bernanke has made four mistakes--at least three of which I said at the time were mistakes:
Not supporting Ned Gramlich's push for tighter regulatory oversight of mortgage financing and associated securitizations and derivatives.
Not moving immediately in early 2008 to nationalize more of the banking system and support asset prices to a greater extent.
Believing in the late summer of 2008 that the big problem was that the Federal Reserve had pumped too much liquidity into the economy, and believing that a bankruptcy on the part of Lehman Brothers would send a healthy message to bankers that they would not always be bailed out by the government and would send that message without having damaging consequences for the economy as a whole.
Failing to walk down the strategy tree in the fall of 2008 and thus to place a high priority on ensuring that if the government's interventions in financial markets worked to stabilize asset prices and avert depression then the government would profit and would be seen to profit healthily from its interventions.
In these mistakes, Bernanke played second fiddle (and Geithner played third fiddle) to first Alan Greenspan and then Hank Paulson. But they were not Paulson and Bernanke's mistakes only: they were Bernanke's.
Now I am morally certain that had I been in Bernanke's (or Paulson's, or Geithner's) shoes over the past two years, I would have made more and bigger mistakes, and we would right now be worse off. He has done better as Fed Chair than I would have, or indeed that almost everyone I can think of would have. So I am inclined to judge Bernanke lightly, and say that the Senate should confirm him for a second term in spite of his mistakes: he is, I think, one of the very best we can get for the job right now, and he won't make the same mistakes again.
See also Redefining the 'Taylor Rule' on seekingalpha.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
