Given the bias in its news coverage it should hardly be a surprise that the Washington Post editorial board endorsed Ben Bernanke for another term as Fed chairman. Still, the arguments in its editorial are worth noting. To begin with, the title of the piece "scapegoat at the Fed," should give everyone a good laugh to start the week. Umm, isn't Mr Bernanke the Fed chairman and before he took over in 2006 one of the seven members of the Board of Governors? Isn't it the Fed's job to maintain full employment? Is 10 percent unemployment full employment? The fact is that Bernanke either failed to see or opted not to counteract an $8 trillion housing bubble. Any competent economist could see that the collapse of this bubble would wreck the economy. How can you possibly fail more completely in a job than Mr. Bernanke has? How is holding him responsible for his job performance making him a scapegoat? But wait, the editorial gets even better: "The prospect that the Fed-bashers might actually come up with the votes to thwart Mr. Bernanke sparked a sell-off on Wall Street and prompted more than a little head-scratching among U.S. trade and investment partners abroad. " Wow, a sell-off on Wall Street, not that is getting really serious. Ten million people have lost their jobs, 20 million homeowners are underwater. That's okay, but a sell-off on Wall Street; oh my God, what is the world coming to? And those head scratching foreign investors, this really sound awful. Then we get the lecture: "But the issue now is much bigger than whether Mr. Bernanke gets another term. By threatening his tenure for no apparent reason other than political panic and pandering, his new opponents have turned this confirmation process into a test of central bank independence, which is an indispensable element of modern economic management." Actually, the Post has a difficult time understanding what is and is not an indispensable element of modern economic management because apparently they still have not heard about the housing bubble. The real story here is that the Fed and other central banks were not sufficiently independent of the financial industry to crack down the practices that propelled the bubble to ever more dangerous levels. A responsible Fed must have the power to crack down on the Goldman Sachs and Citigroups when their profit making bonanzas threaten the economy. Bernanke and his predecessor gave the Wall Street boys a green light to wreck the economy. If there is any hope that any future Fed chair will stand up to the financial industry then Bernanke must be fired for his failure to do so when it was so obviously necessary. One final point that is worth noting. The Post was absolutely gleeful at the prospect of UAW workers losing their jobs when the Big Three auto companies were on the edge of collapse in 2008. It wrote editorials expressing outrage that these people were paid $56,000 a year. The Big Three have never had an auto worker who failed so completely on the job as Ben Bernanke who, by the way, gets considerably more than $56,000 a year.
--Dean Baker
