More on: Obama's It is time for Berna...

More on: Obama's It is time for Bernanke to Go...

Posted in the Banking Forum

A Justday

Buffalo, NY

#1 Jun 24, 2013
Obama:'Thanks Ben, But Time To Go'- Obama:'Thanks Ben, But Time To Go'(And Other Quotes Of The Week):

Fed Chairman Ben Bernanke might as well have been wearing a bull’s-eye on his back this week.

Barron’s said Saturday,“If you had a rotten week—and if you own financial assets of nearly any stripe, you did—you probably still did better than Ben Bernanke, who had a terrible, horrible, no-good, very bad week.”
English: President Barack Obama confers with F...

President Barack Obama confers with Federal Reserve Chairman Ben Bernanke.(Photo credit: Wikipedia)

Bernanke caught flak from the market’s “taper tantrum,” Pres. Obama’s odd “farewell” remarks, and some strong internal FOMC criticism over this week’s Fed statement and press conference.

Obama strongly suggested “he would not renominate Bernanke” in a PBS Charlie Rose interview which aired Monday (LA Times):

I think Ben Bernanke’s done an outstanding job. Ben Bernanke’s a little bit like Bob Mueller, the head of the FBI, where he’s already stayed a lot longer than he wanted or he was supposed to.

The media firestorm raged throughout the week, with various pundits characterizing the remarks everywhere from “Obama just fired Bernanke” to “that was nothing more than perhaps an awkward, unscripted show of appreciation for the job Bernanke has done.”
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Jim Cramer said on CNBC’s “Squawk on the Street” that Obama’s remarks “amounted to a presidential tweet about removing the Fed chairman, something that was done with little thought about the impact this comment would have on the markets.”

There are too many parlor games (about the status of Bernanke and possible successors). There was no need to do what he (Obama) did. We’re always uncomfortable when the President talks about the Federal Reserve.

Then there was the Fed statement and press conference on Wednesday, where interpretations of Bernanke’s “tapering remarks” were all over the lot but the market’s reaction was far from unclear, triggering the biggest two-day selloff of the year.

And St. Louis Fed President James Bullard further fueled the fire as he explained his dissenting vote after the Fed’s comment black-out period. According to Reuters:

‘President Bullard … felt that the committee’s decision to authorize the chairman to lay out a more elaborate plan for reducing the pace of asset purchases was inappropriately timed,’ the St. Louis Fed’s statement said.

The text of the St. Louis Fed press release went on to say:

The Committee was, through the Summary of Economic Projections process, marking down its assessment of both real GDP growth and inflation for 2013, and yet simultaneously announcing that less accommodative policy may be in store. President Bullard felt that a more prudent approach would be to wait for more tangible signs that the economy was strengthening and that inflation was on a path to return toward target before making such an announcement.

Markets clearly agreed with Bullard’s sentiment, as the SPX tumbled over 76 points from the week’s highs to its lows and the Dow gave up about 650 points peak to trough. With rallies leading into the Wednesday Fed announcement and the mild comeback on Friday, the weekly damage to the indices was not empirically as bad as it felt: the SPX was off -2.1%, the Dow fell -1.8%, and the Nasdaq Comp declined -1.9%.

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