Sen­a­tor Bun­ning Berates Bernanke

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This is too good not to spread: Sen­a­tor Bun­ning berates Bernanke at his con­fir­ma­tion hear­ing. What Bun­ning lacks in ora­tory he more than com­pen­sates in forth­right­ness and integrity. One phrase alone is worth hear­ing: “We [should] pun­ish fail­ure not reward it”.

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  • debtjunkies

    pb,

    I do not have any firm fig­ures to back it up except my inter­pre­ta­tion but the rea­son I think Japan per­formed rea­son­ably well is that they have an econ­omy built on export growth and man­u­fac­tur­ing things oth­ers want.

    Dur­ing the 90’s and the 00’s until 2007 the rest of the world was on a credit fuelled con­sumer spend­ing binge. Although China is catch­ing up I’m sure that the major­ity of the cars, plas­mas and small elec­tron­ics were prob­a­bly sourced from Japan thereby keep­ing their econ­omy tick­ing along on the back of exports even thou at home they were a bas­ket case.

    Look at how they are trav­el­ling now with­out export income to drive pros­per­ity!

  • pb,
    I believe that Japan is a bas­ket case going nowhere.
    Its econ­omy has been built ini­tially on a basis of labour imi­tat­ing Worls’ best prac­tices, devel­op­ing stan­dards and cre­at­ing intel­lec­tual prop­erty with lim­ited nat­ural resources (mate­r­ial) requir­ing import and a con­sumer mar­ket to meet their demand. The con­sumer mar­ket falls at a time of huge prop­erty lever­ag­ing that has been going on for 10 years.
    Indi­vid­ual YOY pro­duc­tiv­ity is at an all time high as a neces­sity to cover the exces­sive debt rung up through irre­spon­si­ble lend­ing in the “boom” years.
    Isn’t this our les­son to learn and not to fol­low?
    Please help me with this for I amy have got it wrong. Japan is the worst case sce­nario for any County to model. It is the exam­ple of what not to do.

  • The Out­back Ora­cle

    Gaday
    I don’t know about the Japan­ese. They seemed to do a lot of things right and then really screw up badly for some rea­son. Power elites i guess!
    Cer­tainly their options are pretty well run out as the CAS dis­ap­pears and the sav­ings rate goes from 15% to now 2% and pre­sum­ably on to neg­a­tive from here.

    I was think­ing though that we could do with adopt­ing some of their poli­cies. Get sav­ings going, get back to work…actual work not sit­ting around in Govt air-con­di­tion­ing cre­at­ing laws to stop pro­duc­tive peo­ple pro­duc­ing, run a Cur­rent Account Sur­plus by re-indus­tri­al­is­ing and lim­it­ing con­sump­tion a lit­tle, keep the dol­lar low by not bor­row­ing and repay­ing a whole lot of debt, buy our own coun­try back.
    Sounds great!!! An old friend keeps telling me I’m a dreamer in love and life!!!

  • alex50

    hopetobedr­joe: “Inter­est­ing that this rather sen­si­ble cri­tique comes from a repub­li­can …”

    Inter­est­ing but not that sur­pris­ing. Here in Yan­kee­land the finan­cial cri­sis is mak­ing for some strange polit­i­cal bed­fel­lows, with con­gress­men and sen­a­tors from non-main­stream left and non-main­stream right often find­ing com­mon cause on these issues. This sup­ports my asser­tion that many of these issues aren’t a ques­tion of left vs. right but respon­si­ble vs. irre­spon­si­ble and cor­rupt vs. non-cor­rupt. Or, how much of your cam­paign con­tri­bu­tions come from the finance indus­try.

    Frankly there’s lit­tle of Sen. Bunning’s pol­i­tics that I can stom­ach, but that doesn’t make him wrong about this. His crit­i­cisms are very sim­i­lar to Sen. Bernie Sanders, who is our only inde­pen­dent sen­a­tor (typ­i­cally aligned with the Democ­rats) and con­gress’ only self-avowed social­ist (he’s really not, but you get an idea of his pol­i­tics). Sanders is also a big sup­porter of Rep. Ron Paul’s bill to audit the Fed, and Paul is a Repub­li­can who is the staunchest lib­er­tar­ian in con­gress.

    hopetobedr­joe: “That being said Ben Bernanke may not be the very worst per­son to have as fed chair­man in this cri­sis…”

    Hardly a resound­ing endorse­ment. He’s like an arson­ist who’s being given credit for help­ing to put out the fire. He didn’t fore­see the cri­sis at all, and pur­sued poli­cies that fos­tered it. While his (text­book) emer­gency mea­sures were bet­ter than doing noth­ing, he’s hardly the fel­low I want going for­ward.

    Bernanke claims he’s stick­ing up for the Fed­eral Reserve’s vaunted inde­pen­dence (of all but the banks influ­ence), but in real­ity he wants to keep it opaque, not just inde­pen­dent. He’s opposed to any audit, and won’t answer congress’s ques­tions about the “spe­cial lend­ing facil­i­ties” he’s estab­lished or numer­ous other Fed actions. It’s ridicu­lous as here in the US the power to reg­u­late the value of money is explic­itly given to con­gress in the Con­sti­tu­tion. They cre­ated the Fed by leg­is­la­tion, and while it may be a good idea to del­e­gate this author­ity, con­gress (and the Amer­i­can peo­ple) have every right to know what’s being done with their Con­sti­tu­tional power.

    P.S. Do you have pub­licly financed cam­paigns in Aus­tralia? Here in the US we have var­i­ous cam­paign con­tri­bu­tion lim­its, but in prac­tice they’re a joke. Cam­paign con­tri­bu­tions are one of the biggest cor­rupt­ing influ­ences in our pol­i­tics. The finance indus­try was Pres­i­dent Obama’s biggest cam­paign con­trib­u­tor (and yes I voted for him as the lesser evil). In con­gress they buy both Democ­rats and Repub­li­cans.

    As Sen. Durbin observed so bluntly: “the banks — hard to believe in a time when we’re fac­ing a bank­ing cri­sis that many of the banks cre­ated — are still the most pow­er­ful lobby on Capi­tol Hill. And they frankly own the place”.

  • T.O.Oracle
    I may have been a bit obtuse. They are very dis­ci­plined peo­ple and can be right­eous. They will take their pun­ish­ment and also dish it out. My con­cern is the West­ern World will not accept it so we will have to tought it out dif­fer­ently. They also have no choice, my point being is that the have exe­celled their labour mar­ket to the peak of com­pe­tency, edu­cated their chil­dren and have an intel­lec­tual capac­ity to cre­ate. They do not how­ever have nat­ural resources so that they are soley reliant on exter­nal con­sump­tion espe­cially USA and Aus­tralia to put food on the table. The inter­set rates being so low com­pen­sate for the lack of earn­ings which in fact increases pro­duc­tiv­ity in the way of work­ing longer for less to main­tain the Debt repay­ments cre­ated in the Boom times.
    The West­ern World I believe can draw fromthis that we pos­si­bly could take a “bath” and as pro­duc­ers og nat­ural resources creat demand, once we have ‘cleansed” our debt over­load.
    The­p­oits you make are not old fash­ioned yes they are old but right. This gen­er­a­tion do not know about pro­duc­ing money only about bor­row­ing.
    Clas­si­cal exam­ple: as a Busi­ness Advi­sor I sold a store in a big com­plex (lead­ing REIT one of the World’s biggest)) for
    $1m. The pur­chaser paid Cash.
    The Shop­ping Cen­tre Man­ager refused the appli­ca­tion on the grounds that the pur­chaser although he had expe­ri­ence did not have col­la­toral.
    I was stag­gered and said “it’s CASH, that’s the best you can get at any given moment of pur­chase”.

    Rub­bish she said how can that be you can’t have secu­rity with­out prop­erty. If your buyer owned a prop­erty for $800k he could use that for col­la­toral and put some cash to it and we would approve.

    No amount of per­sua­sive argue­ment would con­vince her that ther was another way. Cash was no good.

    I put the case to Head Office in writ­ing. With­out ack­owledge­ment of the obvi­ous error or fault in think­ing I received an email next day say­ing tha Mr.so and so had been approved.

    And we won­der why we are in trou­ble.
    Don’t get too dis­ol­lu­sioned my freind for there will be another one tomor­row.
    I am try­ing at the moment to recover from a busi­ness lun­cheon- no not the drink- the com­pany were Real Estate and Devo­plers. Guess what. We are always going to be pro­tected against Worls prob­lems We have demand from immi­gra­tion for Hous­ing and Hous­ing will dou­ble every 7 years as it always has done.
    I started to tell them about the Cash and Col­la­toral story and stopped, with the thought “if you talk to fools you will edu­cate them” and if you “lis­ten to then you will become one of them”
    I left the lun­cheon politely but early with­out much to say.

  • hopetobedr­joe

    Alex50,

    I agree on bun­ning — it’s good that even some repub­li­cans see that what the Fed did was wrong. It’s just also inter­est­ing that many (includ­ing Bun­ning) are prob­a­bly not that much less cul­pa­ble than Bernanke. Maybe some, like Irv­ing Fisher after the Depres­sion, will become wiser now after the fact, but these will be in the minor­ity.

    And I def­i­nitely wasn’t try­ing to rec­om­mend Bernanke — he shouldn’t be given credit for avert­ing (or, rather, post­pon­ing-the-worst-effects-of-for-an-as-yet-unknown-period-of time-) the cri­sis he helped to cause. I was just point­ing out that in terms of mon­e­tary pol­icy things could be even worse if you had some­one else in place who was more wor­ried about infla­tion than defla­tion. In all like­li­hood, that would be the alter­na­tive to Bernanke — not some­one who actu­ally knew what they were doing, but some­one with just as much dereg­u­la­tory biase but a greater anti­in­fla­tion­ary bias. That would just exac­er­bate the indebt­ed­ness issue fur­ther.

    It’s just a shame the money was given to the banks instead of putting it into get­ting a half decent health care sys­tem under­way quickly, which, given the fact that the US’s laugh­ing (or, rather, cry­ing) stock of a sys­tem means that health costs are a lead­ing cause of bank­ruptcy there, would prob­a­bly have been a much more effec­tive (and per­sis­tent) way of spend­ing taxpayer’s money to help dampen the cri­sis (quite apart from the issue of not sub­ject­ing people’s health care to the profit motive)…

    As for donations…I believe we do have cam­paign dona­tions but I’m not sure whether it’s as ram­pant as it seems to be over there…maybe I just get exposed to more Amer­i­can than Aus­tralian info though…

  • Cin­quero

    I don’t think Bernanke’s posi­tion is in any dan­ger whats’o’ever. For now. Look how stu­pid Bun­ning looks in com­par­i­son to Bernanke. The name of the game *today* is *NOT* debt reduc­tion. Debt was evil in the 30s. Today, it is evil to reduce debt while there is not enough growth. This marks our future. That is the trend to fol­low.

    My guess is: inter­est rates on US trea­suries will start to rise soon. And that could make Bernanke look like the one no one trusts any more. And then it is a sim­ple mat­ter of sur­vival for the US gov to replace him with a Vol­cker-type chair­man of which they think the mar­kets are trust­ing him.