I am truly stunned.
I didn’t think that anyone could match the incompetence, ignorance, and downright misinformation that continues to spew from the mouth of Barack Obama until I heard the testimony of Ben Bernanke, who recently appeared before the House Financial Services Committee and the Senate Banking Committee.
As eager legislators and a national press corps hung on every word, we learned that Ben doesn’t expect a double-dip recession.
We also learned the Libor manipulation scandal was “a very big deal,” and consequently, the financial markets seemed to applaud Bernanke’s so-called profound, in-depth, and penetrating responses.
Yet, I seem to remember other testimonies, interviews, and hearings when similar questions were asked and firm pronouncements by Ben were given, such as “we’ve never had decline in house prices on a nationwide basis so…I don’t think it’s gonna drive the economy too far from its full employment path.” - (7/1/05) - Offered Without Commentary (0-1)
As prime loans gave way to subprime, then Alt-A, and finally NINJA loans, all due to artificially low interest rates, Ben had a very different view, “house prices have risen nearly 25% over the past two years…these price increases largely reflect strong economic fundamentals.” - (10/20/05) - OWC (0-2)
One of his prior comments was almost prophetic in light of the most recent J.P. Morgan CDS and “Whale” trading scandal, “with respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”
Ben continued, “the Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well managed and do not create excessive risk in their institutions.” - (11/15/05) - OWC (0-3)
I particularly loved this Bernanke statement which incentivized the homebuilder stocks. “Problems in the subprime market seem likely to be contained.” - (3/28/07) - OWC (0-4)
Next, Ben gave his housing predictions for the rest of the economy, “we do not expect significant spillovers from the subprime market to the rest of the economy.” - (5/17/07) - OWC (0-5)
One could certainly make the case that these comments were made years ago and Ben has seen the errors of his ways and has grown and matured in his job. Yes, someone could make the case, but certainly not me.
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