Markets seem to be rather overjoyed that the Greenspan-lite choice to replace "The Maestro" is none other than Ben Bernanke. The main difference between him and Greenspan is that he has a more favorable view of inflation targeting. (The much-maligned EU does pretty much the same.) What is more worrisome is what the markets seem to like--that he is much alike Greenspan. The soon-t0-be retired Fed Chairman has, in recent years, barely raised objections as budget and current account deficits have spiraled out of control while belatedly acknowledging the presence of froth in parts of the housing market.
So, what matters most will be his ability to get these "twin deficits" under control, and particularly to induce a "soft landing" from the "Bretton Woods II"
system of American debt lust. If he sticks to a Greenspanesque course without demanding concrete improvements on these fronts, the folly of Greenspan's actions in the Dubya era will come to fore during his term.
As The Who once sang, "Meet the new boss--same as the old boss!"
Posted by Emmanuel |
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