Challenges loom for Bernanke in second term
Ben Bernanke evaded months of rumours Tues. when President Obama renominated him as head honcho of the Fed. But that doesn’t suggest the previous Princeton professor will be coasting for the subsequent 4 years. Economic gurus say Bernanke faces an array of challenges virtually as imposing as last autumn’s commercial crisis. They include guaranteeing a smooth recovery without igniting inflation, and saying with calls from a recently emboldened, less deferential Congress for a more open Fed that some say should be subject to presidency audits. Lawmakers are also doubtful toward Obama’s offer to grow the Federal Agency’s powers to head off threats to the monetary system. After Obama pronounced the proposal while holidaying in Martha’s Vineyard in Massachusetts, a casually dressed Bernanke thanked him for “his invariable support for a powerful and independent Fed. Reserve.” Bernanke promised “to help give a solid base for expansion and prosperity” as well as “price stability.
Most economists believe Bernanke will be confirmed by the Senate but could get bruised on the way. Many lawmakers cheered Bernanke’s renomination, asserting he forestalled a fiscal crisis from arching into tragedy. Others stated that he failed to head off the housing bubble that set off a classic tailspin. Senate Republican Leader Mitch McConnell of Kentucky expounded Bernanke’s confirmation hearing “will be a chance for the boss man to provide bigger transparency on the actions the Federal Agency has taken. Some judiciary denounce Fed policies that keep secret the names of banks that borrow billions of dollars.
The Federal Agency asserts divulging their identities would compromise their stability. Just 30 percent of north Americans in a Gallup Poll declared the Federal Agency was doing a good or good job, a confidence opening some financial consultants say should be closed to guarantee smooth markets. Most economic experts agree Bernanke’s hardest task will be spotting when to raise rates and withdraw programs that pumped liquidity into clogged credit markets, to head off inflation. The boss man faces a high-wire act as he makes an attempt to do so without squelching the recovery. Raising baseline rates won’t be effective when there’s so much cash in credit markets, asserts Bruce Kasman, JPMorgan Chase chief economic guru.
Bernanke also has to muster the political will to raise rates while the economy is still springing back, claims Wells Fargo economic guru Mark Vitner. He suspects Bernanke will achieve success, referencing his “good instincts. But Steve Hanke, economics professor at Johns Hopkins University, announces, “As long as unemployment remains raised, they won’t act fast enough.