Gluskin Sheff’s David Rosenberg spent a good chunk of his note today assessing the legacy of Ben Bernanke as the FOMC announces its final monetary policy decision under his leadership.
“I’m sure the historians will provide their own assessment with the passage of time,” Rosenberg wrote in a note to clients.
“I mean, look at how we view Alan Greenspan today compared to all the accolades given exactly eight years ago when he was dubbed the ‘maestro.'”
For Rosenberg’s part, Bernanke gets a C- based on the three “phases” of his chairmanship.
For “phase one” — the period before the crisis — Rosenberg gave a tough 35% score for indicating “that the problems in subprime would be contained and that home prices never decline over a 12-month period. …He started his tenure in early 2006 and so he had at least a year-and-a-half to read the same tea leaves that apparently both Ed Gramlich and Janet Yellen both managed to see.”
As the crisis heated up, Bernanke made the necessary adjustments. For that, he gets a 100% phase two score from Rosenberg. “He acted vigorously and courageously, and in particular QE1 was correctly aimed at solving a complete failure in the mortgage market, and along with TARP, did put a floor under confidence and blazed the trail for the recovery,” Rosenberg writes.
Rosenberg got critical again on phase three, awarding Bernanke a 60% score. From his note:
As for QE2 and QE3, I feel these policies were unnecessary, that the recovery, tepid or not, would have continued in the same manner as it did, that providing free money (the funds rate has been between o% and 0.25% since late 2008) and nurturing negative real short-term rates was sufficient to get the job done, and embarking on these quantitative easings merely financially repressed seniors and also distorted price signals in the private marketplace which is never very healthy for capitalism, even if it psychologically juices up asset prices, it now leaves us with a tremendous degree of uncertainty in the future as this experiment draws to a close and this pregnant central bank sheet begins to shrink.
Splitting the difference, Rosenberg gives Bernanke 60% overall or a “C-” (though at some universities, a 60 is most certainly in the D range).
There you have it.