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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32 Responses to Senator Bunning Berates Bernanke

  1. debtjunkies says:

    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!

  2. gaday says:

    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.

  3. The Outback Oracle says:

    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!!!

  4. alex50 says:

    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”.

  5. gaday says:

    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.

  6. hopetobedrjoe says:

    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…

  7. Cinquero says:

    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.

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