In Bernanke We Trust

We thought of several titles for this article including the overused “Bernanke For President”. Then we heard Jim Cramer use the phrase “In Bernanke I Trust” in his comments on Wednesday afternoon. We felt this was the perfect title and with all credit to Cramer, we hope to borrow it for our article.

Our first article about Ben Bernanke also involved words of Jim Cramer in 2008. We defended Dr. Bernanke’s actions when we wrote, “Jim Cramer on Ben Bernanke – Fair in August 2007 and Unfair in August 2008” (—fair-in-august-2007-and-unfair-in-august-2008.aspx ).

We had been critical of Ben Bernanke through out 2007. We felt his attempts to bring more transparency to the actions of the Fed were causing more confusion for investors. So, in one of our commentaries, we invoked the famous adage “Speech was given to man to conceal his thoughts”. We argued that this ability was the main reason for Mr. Greenspan’s reputation.

But this week proved that Ben Bernanke has come far, very far. He has already, in our opinion, surpassed Mr. Greenspan in effectiveness and in his ability to reassure the American people. His performance on “60 Minutes” was simply perfect. He was serenely confident in his ability to avoid depression and to generate a recovery with all means at his disposal. He was humble, proud of his small town roots but totally assured about his ability and the powers of the Fed. It was a masterful performance.

Then, three days later, he acted with decisiveness. It was pure shock and awe. No one in the financial world expected him to announce a buyback of long term Treasuries. Ben Bernanke has been derided as an academic but he acted this time with the deadly deft precision of a master trader. He caused utter havoc on big money players who were short ten year Treasuries to the tune of several billion dollars. The explosion led to the largest rally in long term treasuries since 1962.

Ben Bernanke increased the size of the Fed’s balance sheet by 50% in one move to 3 trillion dollars. Imagine the courage and the sheer nerve to pull this off. If this is not shock and awe, nothing is. The experts, Bill Gross of Pimco, Ken Volpert of Vanguard, on Erin Burnett’s show on CNBC were equally thrilled. Jim Cramer could hardly contain himself. He kept saying ” I cannot believe this guy is so good..I cannot believe how good Ben Bernanke is.. I am speechless”. A few minutes later, he said “In Bernanke I Trust “. 

We feel that as long as Ben Bernanke is in charge at the Fed, the American economy is in good hands. When the American economy is ok, so is the world economy.  So Ben Bernanke is effectively the financial leader of the free as well as communist world. So, we would not have been remiss to say “Bernanke For Financial President”.

It is time for President Obama to exercise good judgment and announce the extension of Ben Bernanke for a second tour of duty beyond 2010.

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