(This guest post originally appeared at the author’s blog)
Few things have been more predictable in recent months than the rallies that occur every time Ben Bernanke opens his mouth. Like clockwork, the market moves higher every time the Chairman speaks as he gives the market exactly what it wants to hear. Today’s comments are no different:
What is odd about this is that Bernanke has been so fantastically wrong about everything for so many years. What warrants this extreme confidence in Bernanke? Bernanke missed the greatest economic bust in the last 75 years. Some argue that he helped us avoid the second Great Depression. Of course, regular readers know I think that is simply preposterous as the Second Great Depression was never on the table. All Bernanke has done is rehash a monetary policy approach that Alan Greenspan admitted was a failure. There is little to no evidence in Bernanke’s history that leads me to think he will be correct this time. The market is nearsighted and I believe this love affair with Bernanke is nothing more than a Tiger Woods like fling. We can only hope the long-term repercussions aren’t nearly as severe as they will be for Woods….