Time Magazine's Person of the Year, Ben Bernanke, is heralded as the savior of the US economy. But the Fed chairman is actually the real villain of the pieceby Dean Baker / December 16, 2009 / Leave a comment
Published in January 2010 issue of Prospect Magazine
Bernanke: heralded as the savior of the US economy while congress dithered
Prospect’s 2009 public intellectuals list contains many crimes against good sense. It was obviously right to include Paul Krugman, Robert Shiller, Elizabeth Warren and several others on the list. Nonetheless, the judges have cleaved to the conventional wisdom and nowhere more than when rewarding our failed central bankers. Mervyn King is bad enough, but the real villain included here is the current chairman of the US Federal Reserve, Ben Bernanke—the same mistake Time Magazine now seems to have made with their choice for Person of the Year.
Anyone who really understood our current financial crisis couldn’t include him. I view the economic situation as first and foremost a collapse of a housing bubble, with the financial aspects being very much secondary. Today, America is sitting on around 10 per cent unemployment, mostly because we lost $500bn in annual demand in residential construction, and then another $500bn in annual consumption as a result of a drop in consumption, driven by the lost $6 trillion in housing wealth.