March 03, 2011
Suppose former FEMA director Michael Brown gave a lecture on how to best rebuild New Orleans following Katrina. Presumably the media covering the speech would point out that Brown’s ineptitude in responding to the storm was one reason that the city’s population was so devastated by it.
For this reason, it is surprising that Post never noted the same irony in reporting on Federal Reserve Board Chairman Ben Bernanke’s advice to states dealing with budget shortfalls. The reason that nearly all the states are facing severe budget problems is that the economy is in the middle of the worst downturn since the Great Depression.
This downturn is the direct result of the Fed’s failure to take steps to curb the growth of the housing bubble before it reached the point where its collapse would devastate the economy. Bernanke was at the center of this failure, having been one of 7 Fed governors from 2002 to 2005 and then coming back as Fed chairman in January of 2006.
Bernanke has never downplayed the extent of this disaster himself, telling Congress in the fall of 2008 that the economy was on the brink of a complete collapse. While the claim that the economy was at risk of a second Great Depression is not true (we know how a reflate an economy, so there never was any risk of a decade of double-digit unemployment), Bernanke has helped to promote it.
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