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A cream puff interview turned up in one of the least expected places Sunday, on 60 Minutes. Correspondent Scott Pelley kicked off an Interview With Bernanke with the question "Mr. Chairman, I'm gonna start with a question that everyone wants me to ask: when does this end?"
Bernanke answered "It depends a lot on the financial system," he replied. "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We've seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."
There was no followup by Scott Pelley. I would have hoped for something like "OK If you have a plan what exactly is it, and why does it seem to be changing day by day by the seat of your pants?"
Sadly, Pelly did not challenge Bernanke on a single question. Instead Pelly just listened to Bernanke, accepting the fact as gospel that Bernanke knows what he is doing. Well if Bernanke knows what he is doing why are we in this mess?
Why didn't Bernanke see this coming? How about some clips of statements Bernanke made about housing bottoming and no recession coming. Why no questions on the Fed's role in this mess? How about Bernanke's opinion on the role of Congress?
Watching the interview I get the feeling Bernanke wrote the questions and submitted them to 60 Minutes and said, I am prepared to answer these.
Certainly Bernanke got his self-serving answer in to the question "What are the dangers now? What keeps you up at night?"
Bernanke's reply was "I think the biggest risk is that, you know, we don't have the political will. We don't have the commitment to solve this problem, and that we let it just continue. In which case, you know, we can't count on recovery."
The biggest risk in my opinion is we keep listening to Ben Bernanke, self-proclaimed expert on the great depression. Yes policy mistakes were made in the great depression, the biggest of which is arguably the Smoot Hawley Tariff which caused a collapse in trade. Blatantly illegal actions were undertaken as well, such as the confiscation of gold and the burning of produce attempting to force prices up.
However, the root cause of the great depression was without a doubt the reckless expansion of credit that preceded it.
Ron Paul or Jon Stewart would have done a far better job on this interview. Then again, so would have my dead grandmother. Scott Pelley simply blew it.
Mike "Mish" Shedlock
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