The majors all have the story that Ben will be reappointed by Obama:

Obama will make the announcement tomorrow on Martha’s Vineyard, Massachusetts, where he is vacationing with his family, and Bernanke is expected to join him, said the official, who spoke on the condition of anonymity. The nomination requires Senate approval. Bernanke’s four-year term as chairman expires Jan. 31

Game theory would have it this is the safe pick, the one that you cannot get into trouble for, even if things go bad later.

A new Fed Chair, in the event something went awry down the road would lead blame back to the White House.

See also

Bernanke to Be Nominated for Second Fed Term by Obama (Bloomberg)

Obama to Reappoint Fed Chairman Ben Bernanke (WSJ)

Obama to Nominate Bernanke to 2nd Term as Fed Chief (NYT)

Keeping Bernanke adds clarity to cloudy outlook (Reuters)

Category: Federal Reserve, Financial Press, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

58 Responses to “Bernanke Wins Reappointment”

  1. AmenRa says:

    The Fed’s POMO didn’t have the effect they were expecting today. So now they need another strategy to propel the markets. Plus I’m not sure if China is happy about this development. This may be the straw that breaks the camels back. This means that QE will continue unabated and the USD is headed downhill fast. My .02

  2. some_guy_in_a_cube says:

    President “Change” strikes again. They’re just scared stiff right now, and the last thing they want to do is rock the boat in any way.

    See you at SPX 150.

  3. Winston Munn says:

    Will the last one to leave please turn out the lights.

  4. call me ahab says:

    we’re saved-

    thank god- i was worried there for a moment

  5. trkam says:

    Well timed ahead of tomorrow’s FDIC report & Bloomberg winning it’s FOIA request against the Fed?

    http://www2.fdic.gov/qbp/qbpSelect.asp?menuItem=QBP

    http://www.bloomberg.com/apps/news?pid=20601087&sid=av_bCYnKeIUk

  6. Cohen says:

    Shit…now what do I do with my “V for Volcker” t-shirt

  7. franklin411 says:

    I was strongly anti-Bernanke until the credit crisis crested in Sept/Oct, but I think he really rose to the occasion. Bernanke wasn’t afraid to admit that free market fundamentalism had been proven catastrophically wrong. Moreover, he wasn’t afraid to calmly analyze the situation and tailor his response to actual conditions.

    History will judge Mr. Bernanke as the man who prevented the Great Depression II. Congratulations to him, but most importantly, congratulations America!

  8. Cohen says:

    F411

    The Fed interfered so much in the “free markets” with its micro-mismanagement of interest rates among other activities to the point that the Fed, Bernanke included, were a major driver of the mess we find ourselves in.

    At least this is a positive tho

    http://www.bloomberg.com/apps/news?pid=20601087&sid=av_bCYnKeIUk

    Fed has to disclose info about emergency loans made to banks.

  9. franklin411 says:

    @Cohen
    Send it to me…I’ll wear it! I’m lecturing on how Jimmy Carter and Paul Volcker cured oil shocks and inflation, but Ronald Reagan got the credit. And I have charts to prove it!

  10. AmenRa says:

    @franklin411

    Free market do work if you let them. If you fail you go out of business. Period. Even if the TBTF banks go under there are other banks that will pick up the pieces. That’s how it should be.

  11. Pat G. says:

    Thank God!! Now, I and my investments can stay the course… BB sucks!! But it’s not personal, I’m with Paul–abolish the FED.

  12. Cohen says:

    I don’t know, that loan info might be pretty ugly

  13. Steve Barry says:

    “History will judge Mr. Bernanke as the man who prevented the Great Depression II. Congratulations to him, but most importantly, congratulations America!”

    Whoa…why am I thinking this…

    http://www.lol-email.com/emailimages/bush_mission_accomplished.jpg

  14. manhattanguy says:

    Bad move. But as BR mentioned, it is a good CYA for the administration.

    Speaking of Fed, I read this on Marketwatch.

    The Bank of Israel surprised financial markets Monday by deciding to raise its benchmark interest rate, becoming the first central bank to tighten monetary policy amid signs of a domestic economic recovery.

  15. Cohen says:

    Is there an intrade market for what time tomorrow Mish Shedlock will blow his brains out following this reappointment?

  16. Pat G. says:

    Ben will be beholding to Obama, so that solidifies the idea that the FED will remain very accomodative to the economy until after the elections next year, whether they need to or not. Appearances sake. My bet is that the markets rally BIG time tomorrow.

  17. Pat G. says:

    @ manhattanguy

    There’s already a thread re: that news on this site. Check the far right hand column under Think Tank.

  18. Cursive says:

    At least Ben is going to go down with this ship. Hubris, anyone? A smarter, more humble man would admit that he cannot stop the inevitable. The end game for this debt bubble is upon us. Who will pop the Arrogance bubble that exists in the NY/Washington corridor?

  19. Steve Barry says:

    “My bet is that the markets rally BIG time tomorrow.”

    Shanghai down over 4%…with a lot of trading left…they have no problem dropping 8% in a day.

  20. Steve Barry says:

    “A smarter, more humble man would admit that he cannot stop the inevitable.”

    No…he’s playing it right. He’s the second most powerful man in the world a long as he keeps the curtain up. What’s so bad? Travel the world all expenses paid…be treated like a king…full security.

  21. Andy T says:

    Ok. Here’s my “if-then” prediction for the balance of 2009. If the market closes below 1008 in the next 48 hours, then 1036 will be the market peak for the rest of the year.

    It would be a classic set up for the market to peak into bullish news on housing (last Fri) and the reappointment of a “Wall St. friendly/quantitatively easy” Fed Chief.

  22. Pat G. says:

    @ Steve

    I believe that the rest of the world’s markets take their cue from how the U.S. markets do. Case in point, big rally Friday carried over to the Far East this morning. Neutral rally today carried over to downward rally in the Far East tonight. If we rally tomorrow all the Asian markets rally tomorrow night. I am not pompous just reality from looking at the flow each day.

  23. Andy T says:

    Pat G.

    Just FYI, when we rally during the day, there are Asian futures markets/ETFs/ADRs that are rallying at the same exact time. When the actual index opens there, they’re just playing “catch up” or vice-versa if it’s a down day. Sometimes there is “news” in Asia that will cause the market to move on it’s own. When that happens, our futures market take into account what happens there immediately.

    Basically, all the markets are 24 hour markets and are reacting to events simultaneously. All that really occurs is that their cash markets catch up with where the futures are already trading.

  24. wunsacon says:

    Cohen, reminds me of John Turturro wearing his “sector 7″ shirt in Transformers…

    >> Bernanke wasn’t afraid to admit that free market fundamentalism had been proven catastrophically wrong.

    Franklin411, since no less than *Greenspan* did that, it required no act of bravery on Ben’s part.

    And, while I agree free market fundamentalism probably wouldn’t work well (if it were ever really tried), the *kinds* of regulations and intervention by our government is not what I would call “ideal”. But, I will admit that one cannot expect miracles in 7 months to address problems built up over 20-30+ years.

  25. Pat G. says:

    @ Andy

    By the way, I bookmarked that link you gave me the other day. As you said, it’s rather long and I want to give it my undivided attention before I comment on it. Just wanted you to know that I didn’t blow it off. I will get to it. Just been really busy the last few days.

  26. wunsacon says:

    Steve Barry, I’m glad to see you posting again. I noticed the decay on some of the double inverse funds (which — FD — I held a little of for too long) and was telling my wife I’m “worried” about you. (Why would I be “worried”? Well, for making the clear call you did for 2008 (at the very beginning of the year), you deserve those gains.) Hopefully, the bull—t bounce ends here and you get rewarded again.

  27. Mike in Nola says:

    Big sigh of relief from GS and the other crooks.

    I imagine they would have pee’d in the pants if Volcker had been appointed and they would actually have had to create value to survive.

  28. Cursive says:

    @SB

    “…as long as he keeps it up…”

    And a fine balancing act it is going to be! Also, I echo wunsacon’s comment – it is good to hear from you again.

  29. A new Fed Chair, in the event something went awry down the road would lead bame back to the White House.

    But what happens when we muddle along like Japan has? Obama really isn’t “change” after all.

  30. wunsacon says:

    Ya know, if there had been no Arthur Burns, there’d be no Tall Paul. (Not the way we “know” him.) Each did what they (sorta) had to do.

  31. Onlooker from Troy says:

    Boy, I’m glad that suspense is over. Now old Ben can stop traveling around tooting his own horn and get back to saving the world.

  32. wunsacon says:

    >> Obama really isn’t “change” after all.

    The Dems can f*** up the economy six ways to Sunday, if they want. I care about blood, diplomacy, science, and physical freedoms more than money. With Obama, there has been some positive change on various fronts.

    And I don’t think the Dems are doing a worse job than the Reps would — especially if we’re talking about the Rep frontrunners the past 10 years. Bring back the Lincoln Chaffees or somebody, then we’ll talk.

    If the next election is a runaway for the Dems, maybe I’d risk a 3rd party vote. Otherwise, “no can do”.

  33. constantnormal says:

    @Andy T 11:32 pm

    what about the “else” clause? — if the S&P does not dip down to touch 1008 within the next 48 hrs (and are those clock hours or exchange-traded hours?), what will be the ceiling then? 1200? 1500? 5000?

    Will this be enough to push the downward leg of the W out into next spring, or is there still a possibility that we might see leftback’s Red October™. I think Mannwich’s Red September™ has just had the door closed on that possibility.

    Personally, I think it will *not* dip even a little before sometime well into September, that this “announcement” was timed to get the markets past the Labor Day weekend with a full head of steam and bullish enthusiasm sufficient to pop the rivets from the boilers. Just another part of our stage-managed economy. Thank goodness I did not buy TZA in anticipation of a Labor Day long weekend selloff. It was a close thing for me this morning.

    OTOH, when I read the news, I silently thanked God that it wasn’t Summers. I guess it shows that some of the outside world’s concerns and apprehension makes it through the presidential bubble — either that or Summers made an ass of himself in meetings with Obama, sufficient to demonstrate that there was a lotta risk putting an egomaniacal bozo in charge of the Fed.

    Barry is (of course) correct, Bernanke is the no-risk appointment. A no-brainer selection.

  34. constantnormal says:

    @ wunsacon 12:12 am

    “if there had been no Arthur Burns, there’d be no Tall Paul.”

    that’s really insightful. Thanks.

    Now who will be Bernanke’s “Tall Paul”? The Real Deal is too old to do battle in the coming Ragnarök. If William Black were politically viable, he’d be my choice to clean up the mess and try to build a new economy from the shards of the shattered one. But Black has too many enemies in the political realm to ever be confirmed.

  35. Onlooker from Troy says:

    So far the futures aren’t all jazzed up over it. Down a couple of ticks. Of course that doesn’t mean anything, but Andy T just might have it pegged. As the say, markets top on “good” news. (I kind of gagged a little as I typed “good” though.)

  36. Onlooker from Troy says:

    Yep, the govt cannot tolerate a truth teller the likes of Black. That’s for sure.

  37. [...] Word tonight that Obama will reappoint Ben Bernanke is disheartening to say the least. Bernanke proudly claimed that he would “not let a depression happen on his watch”. Is that meaningful, if his actions only delayed the inevitable? Reflating the bubble is not a sustainable proposition. I thought Obama would be tough on banks, institute clawbacks, let defunct banks fail, etc. [...]

  38. Mannwich says:

    Of course I’m probably wrong, but me-thinks the Bernanke reappointment is already priced into the markets. Did anyone really believe that he wouldn’t be reappointed? Of course, computers trading with one another could pump this thing higher to infinity as the economy crumbles around us. Who knows, but until someone tells me where the next growth industry is to pull the actual economy (remember that little thing?) out of its funk, I’ll continue to believe that this run up is merely sugar rush in the markets to spur confidence so that it all doesn’t completely fall apart. The thing is – - if they pump too much, oil may reach ~$100/barrel and the dollar may get blown to smithereens, and that will put a damper on things in an even bigger way.

  39. dcsos says:

    Why did Obama wait so long?
    Ben could’ve helicoptered into ASPEN bearing a gold (24k) sash proclaiming
    “MISSION ACCOMPLISHED”

  40. contrabandista13 says:

    I would have bet the ranch on Bernanke.

    It’s six of this. half a dozen of the other….. A Fed Chairman by any other name (tea bagger or douche bag for instance), is still a Fed Chairman…..

    It’s the political safe bet, we’re already too far into the stream to change horses… ! However, it ain’t gonna work…. These boys have painted themselves into a corner and things are going to get to be fun again… In a very soon moment.

    Best regards,

    Econolicious

  41. [...] Game theory would have it this is the safe pick, the one that you cannot get into trouble for, even if things go bad later. A new Fed Chair, in the event something went awry down the road would lead bame back to the White House. –Barry Ritholtz, Fusion IQ [...]

  42. call me ahab says:

    even more interesting than the Bernanke re-appointment is the court decision that orders the Fed to disclose the firms involved in its emergency lending programs-

    “The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, most put in place during the deepest financial crisis since the Great Depression, saying that doing so might set off a run by depositors and unsettle shareholders. . .The central bank “essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed”

    hmmm . . .this could be interesting-

    “unprecedented amount of taxpayer dollars were lent to financial institutions in unprecedented ways and the Federal Reserve refused to make public any of the details of its extraordinary lending . . . Bloomberg said in the suit that U.S. taxpayers need to know the terms of Fed lending because the public became an “involuntary investor” in the nation’s banks as the financial crisis deepened and the government began shoring up companies with capital injections and loans.”

    so true- so true-

    this just may make some banks very, very nervous-

    the Fed has 5 days to produce the information- I would think this alone could spook the market way beyond any positive spin put on a Bernanke’s re-appointment”

  43. Simon says:

    I ask myself what could Ben Bernanki have done differently? In terms of his response to the crises probably nothing. He swore not to allow a 2nd great depression and he has so far managed to at least delay something potentially much worse that the great depression.

    The failure, as many commentators say, has been the lack of material consiquences for those primarily responsible for the debacle. The moral hazard of helping the banks has not been addressed. The methods used to avert the crises in many respects amount to giving an alcoholic a very large dose of the hair of the dog. Monetary stimulus got us into this trouble more can only delay the inevitable.

    A credit based monetary system relies on perpetual credit growth. The alternatives when stable growth is no longer sustainable are deflation or inflation. Since deflation is more destructive to a society based on credit money inflation is what we will get when real growth is no longer possible. The fact that continuous growth is not always possible needs to be acknowledged and a financial systems that caters for that eventuality developed.

    I don’t think Ben Bernanki would be interested in this idea.

  44. SFClaws says:

    Barry, you pulled the What’s New piece?? Couldn’t you have just deleted the posters self promotion? I think a lot of your readers would like to be informed about the Polywell Fusion developments. A little bummed. (PS it is on Wikipedia)

  45. jc says:

    Yes with the Bloomberg FOIL win we will finally know some details about how BB saved the world.

    Hey, after appointing Turbo Timmy it was plenty clear that O’Bama was very comfortable with continuation of TeamBush economic/regulatory policies -or at least afraid to change them much

  46. dead hobo says:

    BR concluded:

    Game theory would have it this is the safe pick, the one that you cannot get into trouble for, even if things go bad later. A new Fed Chair, in the event something went awry down the road would lead blame back to the White House.

    reply:
    ————–
    You’re right. It was the obvious choice. I think I’ll start drinking early today.

  47. super_trooper says:

    @Simon, “what could Ben Bernanki have done differently?”. Many things, letting Lehman fall the way it did. Could easily have structured the bankruptcy, they apparently had that authority with AIG. And he could have structured the controlled collapse of TBTF entities.

  48. cvienne says:

    I agree with just about every comment here (especially the ones that say “Thank God it’s not Larry Summers). The TIMING does seem a bit odd though. I mean, if it was going to be Bernanke all along, they could have said so months ago.

    Which brings me to my theory.

    Perhaps there is something “imminent” that is bubbling to the surface. As we all know, there are MANY things bubbling to the surface, but most seem to have been held miraculously at bay.

    Maybe they’re about to drop a big one on us.

  49. dead hobo says:

    cvienne Says:
    August 25th, 2009 at 7:45 am

    Which brings me to my theory. Perhaps there is something “imminent” that is bubbling to the surface. As we all know, there are MANY things bubbling to the surface, but most seem to have been held miraculously at bay. Maybe they’re about to drop a big one on us.

    reply:
    ————-
    I’ve been wrong a few times here about this, but I think you’re right about ‘something’. The $300b mortgage protection / market pump program ends in October. Perhaps $35B of electron money remain to use for injections. Logically, one would expect a market crash to follow after the liquidity injections stop. I suspect Ben the Bubble will inject $150b after that for additional market support.

    In spite of the happy talk headlines, the world appears to be in a liquidity trap.

    The markets and the price of oil are the only places prospering, except for maybe govt giveaways like Clunkers that most likely just moved car sales into a different purchase window. China is in a frantic cash pump. If you ignore all but two countries just like the news papers, Europe is slipping.

    Now the Fed has to be honest about some programs it wanted to hide.

    If there’s a hail Mary out there, where is it?

  50. dead hobo says:

    And about the $300b of injections. Logically, think this through.

    The electron cash was used to purchase UST debt. While injecting cash it also monetized an amount equal to a 1 year deficit prior to the crash. In any other universe, that would be a huge scandal just by itself. Books would be written about it for 100 years.

    The intent was to, ostensibly, buy down interest rates to make housing affordable. The $8000 tax credit plus the fact that news reports say that 2/3 of sales are foreclosures and similar types of transfers make the injections appear to be a massive effort for a so-so benefit. The fact the world is in a liquidity trap makes this cash ineffective at being inflationary at this time.

    Next, the cash needs to go somewhere. Rising stock, copper, and oil prices appear to be the next stop. To most 401k holders, this represents a paper gain only if they were still holding. It is only a realized gain if the investment is sold at the top. Most people won’t do that.

    i-Banks and hedge funds are the next stop for the cash. They are smart enough to know paper gains are fictional. Cash is king when it comes to realized income. Of that $300b, by the end of the program, roughly 10% will go directly to the bottom line of GS with 1/2 of that being paid out as commissions. Thus, Ben the Bubble is directly subsidizing hedge funds and i-Banks, plus inflating the price of oil. The rest of the work force is less fortunate.

    Two things might happen this fall.

    Ben the Bubble might extend the pump with perhaps a $150b chaser. GS will be enraptured. Housing will benefit, or so press releases will state. The liquidity trap will keep text book inflation under control, but the price of oil will probably break $100.

    -OR-

    The program will end as scheduled. The markets will fall, but UST debt will be a safe haven and rates will remain low as cash moves from equities to treasury debt. Oil may or may not fall. Perhaps Ben the Bubble will sell some of the $300b back into the reversal.

  51. cvienne says:

    @dh

    I’d say #2…

    Americans aren’t going to be too happy paying $3 bucks at the pump while Wall St. is paying out its bonuses.

    I was in Home Depot last week (because I broke the handle off my loppers)… While I was in the aisle which had the loppers, I passed right by the pitchforks… They were all sitting there just as shiny as can be… waiting… just waiting…

    At least I know where they are!

    What’s funny (to note), was that the “torches” were in the adjacent aisle… How convenient!

  52. call me ahab says:

    cvienne says-

    “Maybe they’re about to drop a big one on us.”

    i find it interesting that Bernanke was re-appointed the very day that the court decision came out that requires the Fed to disclose the banks who are using its emergency lending programs-

    maybe the “big one” is that another bank crisis will emerge after it is disclosed who these banks and financial institutions are what was lent and what was used as collateral- maybe after these facts see the clear light of day the financial institutions will lose all value and public outrage will grow even more intense-

    maybe this will lead to a complete audit of the Fed and maybe people will be held accountable for the biggest banking scandal of all time

  53. manhattanguy says:

    This article about GS is pretty funny

    If GS had a town hall meeting…

    http://www.marketwatch.com/story/if-only-goldman-sachs-had-a-town-hall-2009-08-25

  54. jc says:

    I don’t expect full disclosure from the Fed.

  55. jc says:

    The “big one” will probably revolve around a foreclosure crisis in the bubble states when the big banks give the US an ultimatum to buy their shadow inventory or they’ll flood the market with foreclosure sales.

  56. The Curmudgeon says:

    @DH:

    Don’t forget the $1.25 trillion being ploughed into the residential real estate market through purchases of gse mortgage backed securities. This is roughly double the entire residential mortgage market this year. It is the thing keeping interest rates at such ridiculous levels, but it, too is a form of QE. The Fed just creates its little electronic dollars and gives them to the gse’s that would otherwise have to find purchasers for its crappy paper on the open markets. They then can plough more dough into the residential mortgage markets, artificially propping up demand, so prices are artificially halted in their descent, and we have returned to circa 2006. That ended well, now didn’t it? And this doesn’t include the roughly $200 billion in losses at the gse that the Fed gov has papered over while they are in its conservatorship.

  57. manhattanguy says:

    Here is another great article from Marketwatch

    I like Paul Farrell’s views

    Dismantle Bernanke’s ‘Happy Conspiracy’ … now!

    http://www.marketwatch.com/story/dismantle-bernankes-happy-conspiracy-now-2009-08-25

  58. [...] CEO Barry Ritholtz also described Bernanke’s reappointment as a “safe pick,” noting the White House would [...]