Tags: WSJ | Fed | marks | Bernanke

WSJ Metes Out Mixed Marks for Bernanke

Wednesday, 29 Jan 2014 07:39 AM

By Dan Weil

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Wall Street Journal editors offer mixed grades to Ben Bernanke for his chairmanship of the Federal Reserve, which began in 2006 and ends Friday.

"One way to think about the Bernanke era is to divide it into three parts: before, during and after the [2008] financial panic," they write in an editorial.

"His record before the crisis was a clear failure. He deserves good marks for his actions in the eye of the storm. As for his extraordinary monetary exertions since the recovery began, the legacy will depend on how it all turns out."

Editor’s Note:
18.79% Annual Returns . . . for Life?

In their assessment, the editors include Bernanke's tenure as a Fed governor from 2002-05.

"Keep in mind he was present at the panic's creation. . . . Mr. Bernanke was the board's intellectual leader" in keeping short-term interest rates too low in 2003-04, the editorial says. That low-rate policy "produced a credit mania that led to the housing bubble and bust."

But, "once the crisis hit, Mr. Bernanke and the Fed deserve the benefit of the doubt," The Journal editors write. "From the safe distance of hindsight, it's easy to forget how rapid and widespread the financial panic was."

Nonetheless, the Fed's massive easing program hasn't prevented a sub-par economic recovery, the editorial says. And "the biggest test will be what happens when Mr. Bernanke's successors are obliged to unwind his policies."

The outcome of quantitative easing in particular is still a question mark, experts say. "We don't know and won't know whether this unconventional policy has created a serious risk until we see how it plays out," Harvard economist Martin Feldstein tells McClatchy. http://www.mcclatchydc.com/2014/01/27/215862/savior-from-depression-or-father.html

Editor’s Note: 18.79% Annual Returns . . . for Life?

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