Poking Holes in a Balloon

I love Dean Baker and his website at The American Prospect. Baker sees his job as vigilant guardian of the truth which means poking holes in the pretense and fabrications in the media. Here is his latest effort:

The Beatification of Ben Bernanke

The Washington Post gave a glowingly positive account of Ben Bernanke's efforts to deal with the economic crisis. Missing from this discussion was any mention of the fact that he deserves a large part of the blame for this crisis.

Bernanke was a persistent and vigorous bubble denier, first in his capacity as a member of the Board of Governors and then on his becoming Fed chair in January of 2006. Even as the bubble began to unwind in the winter of 2007 he gave assurances that the problems would be contained in the subprime market. After he engineered the takeover of Bear Stearns in March of 2008, Bernanke told Congress that he did not see another Bear Stearns out there. Needless to say, he was surprised by the collapse of Lehman and the market's response six months later.

It might have been worth including some acknowledgment of the fact that, in addition to being the person trying to lead us out of this crisis, Bernanke was also one of the people who deserves the most blame for leading us into the crisis.

The media have a tendency to write glowing accounts of people in positions of power in the United States. I recall when a person I knew quite well was given a high position, the news reports described this person as being brilliant and having a sharp intellect. I personally liked and respected this person, but I doubt very much that anyone who knew this person would have made a point of talking about their brilliance or sharp intellect.

Unfortunately, reporters often seem to believe that it is their job to promote confidence in the people in power. It isn't.

The fundamental problem with the Obama administration's efforts to deal with the financial crisis is that most of the key people were in fact participants in facilitating the disaster: Ben Bernanke, Timothy Geithner, Larry Summers, Robert Rubin. (I wanted to say "creating" the disaster, but I recognize that it was the big banks that did MBS securitization, the rating agencies, the mortgage brokers, and the real estate industry that created the disaster. They were facilitated in that people who understood this industry should have pointed out the explosive danger of the fraud that was allowed to build up inside the "deregulated" industry. This is the responsibility of this rogue's gallery above. These were the knowledgeable people who had a responsibility to shout "stop!" and explain the dangerous buildup in financial fraud. But they didn't. Of course the biggest rogue of them all, Alan Greenspan, doesn't show up on the list because he isn't working for the Obama administration. But the rest do.)