Chillin' out till it needs to be funded
Bernanke erred on the wrong side once earlier in July-September 2008, when so close to the answer, he chose to maintain ‘Everything’s OK’ in the public domain. Now, probably as he comes to believe his own superhero skills after being feted as having successfully crossed the chasm, he is erring again with noticeable scorn in his address targeting the federal budget even as 7 out of 50 states fall by the wayside and cities remain bankrupt. While Europe’s Landesbanks and Caja Surs will be in the limelight, it does not reduce or redeem the peremptory nature of bankruptcy for US states and municipal hotheads going to the cleaners.
He was appearing before the House Budget Committee and Krugman’s old professor seemed his usual vacillating self, riding out his tenure and landing plum kudos after th whistle has spent itself.
To Republicans, he offered warnings about the fiscal perils of an aging population and the potential threat of soaring long-term interest rates. To Democrats, he made it clear that persistently high unemployment was a drag on growth and said that additional short-term stimulus spending might be needed.
All the while, Mr. Bernanke refused to endorse any particular spending cuts or tax increases, or even specify the balance between the two. And he was not subtle about his strategy.