Ben Bernanke: The New Maestro? … Ben Bernanke is now positioned to outshine his long-serving predecessor among those making the greatest impact as leaders of the U.S. Federal Reserve. It's not just that the 18-year reign of Alan Greenspan-the once universally admired Maestro- is now perceived as severely tarnished from the vantage point of our post-2008 woes. Greenspan, who once could do no wrong with the denizens of Capitol Hill and the inhabitants of bank trading rooms, now stands accused of being so allergic to economic downturns as to prime the system for asset price bubbles. His utter faith in the self-correcting mechanisms of the market also proved misplaced. But back to Bernanke. He's had to steer Fed policy through a thornier economic patch than Greenspan, despite the latter's long service and good work during the 1987 stock market crash, the Russian debt default and other significant episodes of financial turmoil. Indeed, Bernanke's ominous remit perhaps outranks Paul Volcker's cracking of significant stagflation in the early 1980s. – Wall Street Journal
Dominant Social Theme: As Bernanke's regime unfolds, a new opinion takes hold?
Free-Market Analysis: We are pursuing a theme we have identified previously and written about in many analyses, most recently in the article "Senator Scott Brown's Disturbing Story." The theme spells trouble for the power elite because it indicates the threadbare nature of their tactics. When met with deep-seated resistance to their dominant social themes, they have a habit of attempting to insist that their promotions are functioning properly nonetheless.
Which brings us to this latest sub-theme, that Ben Bernanke is a budding maestro, an unheralded genius. We tend to doubt it. In fact, Bernanke is a facile symbol manipulator, someone that the elite identified early as a promising student and likely continually cultivated with an eye toward using his talents. Central banking itself is nothing but a promotion. The idea that a small circle of wise men can run the economy by fixing the price of money is ludicrous. The result cannot be other than disaster. And it is.
We have no idea how the Wall Street Journal came up with this blog singing the praises of Bernanke. But we have excerpted the article above and used its rhetoric as an example of a specific trend. It shows once again how the elite seems immune to opposing viewpoints; Bernanke is in terrible odor in America, and yet the powers-that-be will insist on his rehabilitation. This is par for the course. It is illustrative of elite promotions generally.
Global warming was obviously exposed by emails and falsified data to be a promotion. It was intended to move the Western world toward a carbon currency that would function as a monetary chastity belt as well, taxing people for using energy and revealing their every energy-related activity. Yet the fear-based global warming promotion is with us still. Several panels have examined whether those involved were in any sense involved in conscious attempts to mislead and all have concluded that there was no wrongdoing.
However, even a cursory examination of the emails will present evidence otherwise. The solution? The panels apparently did not even look into the most damning emails, coming to rapid-fire conclusions that precluded serious investigations. And now, with the panels behind them, the movement's founders are trying their best to rebuild momentum. Predictably, the only real support being pro-offered is coming from the political class.
There are other examples, of course. The Afghanistan war seems a promotion. There is no doubt from our humble perspective that the powers-that-be hoped to subdue Afghanistan and put an end to Pashtun independence (perhaps while taming Pakistan). But it hasn't worked out that way. Instead of withdrawing, the Pentagon and its media enablers have manufactured one rationale after another for staying in Afghanistan and expanding the military footprint. Again, we see that when a promotion (and its implementation) is failing, the elite tendency is simply to "double down." Here's some more from the article on Bernanke:
Let's credit the central banker with one clear victory already, even if the economy's still a mess and regulatory success is an open question. Bernanke was certainly influential in beating back the biggest threat to Fed monetary policy independence in recent memory.
Remember, it was just December of last year when the full U.S. House of Representatives passed a version of the financial regulatory reform bill that included giving powers to the Government Accountability Office to "audit" monetary policy decisions. In other words, congressional watchdogs would expose the inner workings of necessarily independent interest-rate policy for second and third guessing by politicians.
Also, early regulatory reform proposals in the Senate removed, rather than enhanced, the Fed's bank regulatory powers. And yet, the Fed wound up with more regulatory power. Maybe there's a new maestro in town.
We can see from this additional excerpt that there is not much of a reason to recommend Bernanke because the evidence – the one clear victory – doesn't involve the economy but in "beating back … a threat to Fed monetary policy independence." Of course, this is the one kind of victory that Bernanke CAN achieve, because the powers-that-be still have a pretty good hold over the political process.
But when it comes to the economy it is harder to make the case that Bernanke and his circle of wise men have been successful in any meaningful way. This is not surprising of course because the central banking toolkit is brutally limited. While there are numerous fancy ways for explaining the banking process, the actual activities come down mainly to pumping electronic and paper money – delinked from actual assets – into the economy in the hopes that the phony "stimulus" will somehow translate into real economic activity.
But in big downturns like this one, such artificial mechanisms are difficult to implement with any degree of effectiveness. It's not as if the average citizen doesn't "get it" either. This is the first financial crisis in the history of central banking to be carried out in full view of the general public. There is no place for central bankers to hide in the era of the Internet, and their every move has been subject to scrutiny and increasingly, we would argue, to skepticism and even contempt.
Here's an article on the way Americans apparently REALLY feel about the economy. It appeared recently in the Financial Times, and there is no implication that Bernanke is a genius or maestro of any sort. In fact, the people questioned for this survey probably feel exactly otherwise.
Americans lose faith in recovery … A large majority of Americans believe their economic situation is the same or worse than it was a year ago when the US was still mired in recession, according to a new survey that will heighten concerns about waning consumer confidence in the world's largest economy.
The study by AlixPartners, a business consulting group, will show that even after almost a full year of growth in the US economy, many Americans are still not feeling the benefits of the recovery, and remain more preoccupied with fixing their household balance sheets than spending money.
The outcome of the study chimes with recent drops in other US consumer confidence indices – most recently the consumer sentiment survey from Reuters and the University of Michigan, which plummeted unexpectedly in July, causing a sharp drop in equity indices when it was released on Friday.
Such mounting pessimism will reinforce the belief among economists that the US recovery has hit a significant roadblock in recent months, and that consumers are in no position to drive the economy forward as government stimulus fades in the second half of 2010.
Politically, it will further raise the heat on the Obama administration and congressional Democrats, given that the sluggish economy and the 9.5 per cent unemployment rate are expected to be at the heart of midterm election campaigns later this year. …
"People are starting to wonder if relief will ever come, and in some ways, they are giving up hope," says Bryan Eshelman, managing director in the global retail practice at AlixPartners. "Consumers are frozen in their decision-making. Nobody can get a good feeling that we have solid ground beneath us."
This doesn't seem to bode well for Bernanke's legacy, such as it is. The mainstream media can continue to paint Bernanke as a maestro-in-the-making but we think his legacy, as it develops, will be a good deal murkier than that. Which brings us to the main point we wish to make: It is impossible for the power elite to muscle its fear-based promotions into success. Promotions by their nature are amorphous and suggestive. To attempt to create an atmosphere of credibility around a failed promotion through a declaratory procedure is foolishness.
But let us try to present this point another way, as we have in the past. It is most important. There are very few of the power elite, though they apparently control most of the Western world's wealth. But in order to maneuver the world in a certain direction, the elite needs to create dominant social themes. These are essentially frightening fictions intended to panic people into giving up wealth and power. There is no other way to direct people effectively except to make them feel self-directed. This is the only way a few thousand "elite" can control six billion.
But many elite promotions are sputtering in the Internet era. They have been disrupted, just as the Gutenberg press undermined them previously. The continuing effort to animate these carcasses tells us the elite's toolkit is bare. It has no answer to the Internet's corrosive truth-telling except to continue to maintain the fiction that its promotions are believable and actionable.
Ultimately, the process begins to resemble the insistence of a child who has not told the truth, but who continues to insist on the falsehood even when others have seen through it. This does not make the untruth any more compelling however, but only adds to its potential objectionableness. Thus it is with the power elite and its promotions. They seem increasingly incredible, yet those in high places seem to insist on them. This merely creates more questions – and ultimately ill will among the very audience these themes were intended to influence.
This is, in fact, how political parties fail, and social comity is undermined. By insisting on the validity of increasingly discredited promotions, the elite puts its entire program in jeopardy and diminishes the probity and credibility of its various allies as well. The elite may be determined to seed the wind, but they are increasingly in danger of reaping the whirlwind.