Chariman Ben Bernanke’s Economic Sense and Sensibilities
Nightly Business Report
Thursday, June 15, 2006
SUSIE GHARIB: Before his comments sent the markets higher today, Fed Chairman Ben Bernanke took some heat for his views on the economy and interest rates. Tonight’s commentator thinks Bernanke didn’t deserve it. Here’s Myron Kandel, president of the New Hampshire Initiative for Corporate Responsibility and Investor Protection.
MYRON KANDEL, PRESIDENT, NEW HAMPSHIRE INITIATIVE FOR CORPORATE RESPONSIBILITY: It didn’t take a genius to worry that the stock market was overpriced last month when the Dow shot up close to their record high, what with interest rates rising, the economy slowing, oil prices soaring and the trade deficit raging. So the market began tumbling and its cheerleaders had to find a culprit. What about the new chairman of the Federal Reserve, Ben Bernanke? Why not? He was warning about the threat of inflation. Imagine, a Fed chairman worried about inflation. How novel.
But then he had the naiveté to suggest that interest rates might not always go up. In fact, he said, while the Fed might even pause on raising rates, that wouldn’t necessarily mean it was finished. The traders who dominate the markets these days fixated on the word “pause.” They ignored the rest and sent prices higher.
Then an enterprising TV reporter, CNBC’s Maria Bartiromo, got Bernanke to say he thought the market had over-reacted to what, I think, were absolutely sensible remarks. When she reported that comment, the stock market resumed its previous decline. How did the cheerleaders react? By bashing Bernanke. Forget about the fundamentals. It’s easier to target a new Fed chairman, who speaks honestly. I say, Ben, keep telling it like it is. I’m Myron Kandel.