Bernanke deserves thanks, not scorn

The Fed chairman is not only taking on Washington, he's taking on the world to get this economy moving again. And that's a lot more than anyone else is doing.

By Jim Cramer Nov 10, 2010 9:22AM

jim cramer of thestreet"QE2 bubble attacks!" That's pretty much all I am hearing these days.

 

I don't hear many people saying what I'm feeling: What are we supposed to do, tolerate ultra-high unemployment and just accept it as a fact? What are we supposed to do, just "hope" that things will get better? What are we supposed to do, depend on Congress to help us? What are we supposed to do, rely on our trading partners to help us? You know, the ones that we defend with our military, our treasure, and the ones that have dumped stuff on us forever?

 

Is that the plan?

 

Do people think that everything is just fine and that Bernanke is panicking?

Look at the hand this guy's been dealt. A president with no financial discipline who hasn't been able to create jobs. A congress that has taxed the system and has slowed the economy. A president and a congress that will most likely let the tax cuts expire at a time when it looks a lot like 1937.

 

What is he supposed to do?

 

This isn't 2002-03, when you could criticize Alan Greenspan for keeping rates low to get a housing boom going. We could have bounced around in that economy and eventually gotten hot.

 

This is an economy that will be like Japan's if something good doesn't happen, and the only grownup in the system who recognizes this is Ben Bernanke?

 

If you have no job, if you are poor, if you are underwater in your house by no fault of your own (meaning you are unlucky), if you are trying to get a loan or a good job, you have to be rooting for this guy.

 

I just hear tons of rich people lecturing us about how wrong it all is.

 

The alternatives I have heard -- if they are ever even spoken -- seem meaningless or absurd or punitive.

 

Bernanke is doing a great job. He's not only taking on Washington, he is taking on the world in the name of trying to get this economy moving again, and that is a lot more than anyone else is doing. It's time to applaud the man and castigate those rich people who offer nothing for those who are down and out and just trying to get by. They should be ashamed.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Click here to follow Cramer's trades for his Charitable Trust.

 

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31Comments
Nov 10, 2010 9:55AM
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two years ago Cramer told Meredith Viera and Today Show viewer's to get out of the market for 5 years-put your money in a can or under your bed..This guy is as unpredictable as the weather and makes a better weather vane than stock analyst/predictor/commentator. he's a joke...
Nov 10, 2010 12:46PM
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hey Jim...didn't you tell us that Lenny Dykstra was a genius and he was one of the few people you would take investment advise from?
Ah...how is Lenny doing now?
Nov 10, 2010 11:10AM
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"Look at the hand this guy's been dealt. A president with no financial discipline who hasn't been able to create jobs. "

 

Totally agree, but don't see the point in lamenting the Bush presidency at this late date.

Nov 10, 2010 12:16PM
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This is an economy that will be like Japan's if something good doesn't happen, and the only grownup in the system who recognizes this is Ben Bernanke?

 

Forgive me Mr. Cramer but I don't think your analogy holds.  Japan went through their lost decade because they endlessly printed money, kept interest rates low(zero), and never saw a stimulus they didn't like.  I do not see how having our FED repeat the exact same steps would produce a different result.  Actually, I think that's one of the definitions of insanity

 

Not buying bonds and forcing others buyers to attend those treasury auctions or an increase in treasury interest rates to put pressure on government to not spend is the only way we're going to get out of it.  Sometimes the most powerful thing the FED can do is nothing, or be proactive by literally threatening treasury that they are going to dump US debt.  That is what was envisioned originally when the FED was founded.  They were suppose to play traffic cop and protect the value of the currency.  Instead they have taken on the roll of Enabler-In-Chief to a Congress and President that spends like drunken sailors, no disrespect to drunken sailors.

Nov 10, 2010 12:20PM
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Fantastic job, Ben! When is QE3 -> QE27? Cranking up the printing press so people can buy their Ipod/Iphone for Christmas, while heaping mountains of debt on our children/grandchildren. Kramer, you are a @#%&ing idiot!!!
Nov 10, 2010 11:22AM
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Inflation is bad for everyone except the 'banksters' who game the system with other people's money.  If you think inflation is going to hurt the rich guy with millions to throw around, pity the poor guy who lost his job and his house, and is trying to survive on a small unemployment check and what's left of his savings.  When his rent and food costs start going up 20% a year, but his benefits are manipulated into staying the same, how is he better off?

 

Bernanke wants to get CPI 'up' to 2 percent, when the government is skewing the numbers down to avoid paying more for social security.  Inflation is already at least 5% if you calculate it the way they did 30 years ago.  Check out the articles at inflation.us for some real-world analysis.

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Some Financial Wizard somewhere should sit down and figure out what the pros and cons would be to have taken the money spent on the stimulus, (Trillions?) and excused the bills of the American Taxpayer (paid them off). 

All we hear is the banks getting this and the banks needing that.  They need money because the Gov't makes them have a certain percentage in cash to back themselves up and to loan out to people at reduced rates that are still over extended now.  

A low interest rate is what got us into this mess.   The American People were allowed to borrow more than they could ever hope to pay back. 

If we forgave the loans of all taxpayers the banks would have eventually gotten the money on the rebound.  As it is now, the banks are hoarding our inflated (new printed) money and the American people still have their old debt.  This is the reason there isn't anyone working.  No one is buying even at the reduced interest rates.   I think we learned our lesson for the most part and would rather pay down on the bills before buying more junk from overseas.

Plus the Administration wants to tax us into the stone age so they can redistribute the wealth.   How about just giving the money to the taxpayer so we can pay down debt with it?

Jim, do a study on that and let us know what would happen.  Thanks.

Nov 10, 2010 11:56AM
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The reason for most people's wrath at Bernake isn't about what he's doing or not doing right now. It's that he and Geitner and Summers and the rest of the Goldman Sachs crowd ought to all be in jail. It's criminal that these guys are/were in charge of the economy in the first place.
Nov 10, 2010 12:34PM
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This time Jim's correct.  If you want to blame someone for the financial crisis blame those in power when the Glass Steagall banking regulations were repealed; that was Dec, 1999 and President Clinton and BOTH parties in Congress.  Just what the voters wanted. The liberals promised houses for everyone and the conservatives promised more competitive banking in all financial areas (read CDO, CDS, blah, blah).  If you want to blame higher prices on something start with globalization.  The US is NOW required to compete with the rest of the world and we only represent 1/20 of the world's consumers.  No more free bananas, copper, iron, oil and our labor must be priced competitively else US multinational enterprises will have to relocate to other countries.  So everybody better adapt and your standard of living will decrease or you'll perish (Darwin).

 

Nov 10, 2010 7:09PM
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I agree , it is that bad . Big Ben is at least got the guts to try . Max benefit is small from what he is doing , by gosh he is doing something though besides insulting our intelligence and Gunning another brew . I do not know how he will feel about this later , maybe not well . I do know that what he is doing will help restart certain areas of a dieing economy . Very deep , very subtle , but it will get a few things going better .

 The real blame for all this trouble is in your commentary . You are 95% right on target and due for a good spanking so duck out temporarily . Remember , only the good die young .

Nov 10, 2010 6:00PM
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I usually just pass over the work by Mr. Cramer, but in reading him today, I agree. Chairman Bernanke is doing as good a job with a "lousy hand" as one could hope for. 

But then I think that the Administration is to be commended also.

In a "storm" I believe one just seeks to keep the ship afloat; and he/she doesn't start throwing the poor, unproductive (read unemployed) over-board.

Thanks.

GSL @ Seattle

 

Nov 10, 2010 1:02PM
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The problem with the whole system is that it gives the money to the banks and financial institutions to increase investment, but who's going to invest when demand is so weak? Go ahead and create the money, Ben, but give it directly to the people who need it, who will spend it and increase demand.  There's no shortage of money for investment.

We'll also never fix this demand problem without incurring too much debt if the distibution of wealth stays so heavily skewed  in favor of the top 2% of the income distribution.

 

 

Nov 10, 2010 10:14AM
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Consider this, inflation, is good for anyone who doesn't have posative equity and already dealing with long term loans.  Inflation is BAD for those with LOTS of CASH (that would be, the RICH). Deflation (which is espoused by a few people, hard to believe) is GOOD for the cash rich people.  Now, if you have no debts, I can see how inflation would not be your favorite thing in the world.
Nov 10, 2010 6:37PM
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Well hey, I like Bernake. I'd invite him to a barbeque and we'd have a great chat. Truthfully speaking both Geithner and Bernake have made my very wealthy in this quake of gold-silver....so I like them regardless of the dollar devaluation and inflation...whether Stag or Hyper....it's all good. I go with the punches, I'm here to win and Bernake has made me wealthy in the last 3 years.
Nov 10, 2010 10:20AM
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The constant tweaking  of  the economy by the Fed is what has caused us to be in the problem we are in.

We have allowed Labor Union's to run amoke then allowed Manufacturing CEO to outsource everything to China.  CEO's are put control now and the FED has kept interest rates so low that risky investment can be taken on. Our Banks, Oil companies have been so compacted that there is no competition.  and Bernanke is doing the wrong things to correct the problem.

Nov 10, 2010 5:37PM
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Mr. Bernanke is enthusiastically devaluing the dollar.  The thought is that a cheaper dollar will help US exporters.  But a cheaper dollar makes everything we import more expensive, most obviously oil.  Devaluing the dollar makes life more expensive for the average wage earner.  It’s a pay cut.  Mr. Bernanke is afraid of deflation, give me a break, there’s no such thing as deflation with a fiat currency.  In the 1930’s the dollar was backed by gold and in that case deflation was possible.  Wake me up when a candy bar costs a nickel again or an ounce of silver costs one dollar then I’ll believe in deflation.  Anyone who’s saved money in his or her life knows that a cheaper currency is undesirable.  In 1970 a dollar could be exchanged for a silver dollar (1 oz of silver).  The average starting salary for an engineer was $11,000/yr ( I know because I graduated with an engineering degree in 1970).  That was 11,000 ounces of silver.  Today silver is $24/oz.  Are beginning engineers getting 24 * 11,000 = $264,000/yr today?  This is why both mom and dad have to work today and are still mired in debt.  Devaluing the dollar while not correspondingly increasing wages has made most people in the US poorer in the last 40 years.  If this trend continues soon we will resemble a third world country with a handful of trillionaires and a multitude of desperate peasants.  If it weren’t possible to buy on credit the US would probably resemble Afghanistan already.  How many people in the US today could buy a house or a new car with cash?

Nov 14, 2010 12:27PM
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Only time will tell who is correct Fed or JC. There are pros and cons for either view. It is probably good to hold some gold miners or physical gold,commodities, some equities and diversify $ into other currencies, Canadian $ for one. Inflation will come but I do not expert hyperinflation. The USA is not a basket case but neither is the prospect for near term high growth or massive job creation. My biggest recommendation is Nat Gas the price of which is where gold was in 2000. Ten years from now it will be a home run play.

Nov 13, 2010 1:48AM
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Cramer is full of it. QE 1 and 2 have already driven up the price of gasoline due to a weaker dollar. For the past 2 or 3 years people are getting nothing on their savings or interest bearing checking accounts and QE2 will drive them down further.  If people can't afford to borrow at 5 percent they can't afford to borrow at all, even if it's 0 percent. The only good it did was to enrich corporations who aren't hiring anyway.

 

The only way to create employment is to bring back manufacturing thru business incentives to manufacture in the US and bring back some of the jobs.

Nov 11, 2010 12:37AM
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Wow, I never thought I would see the day that destroying the dollar was thought of as economic sense by abyone but the government. What are we supposed to do? Stop spending money you don't have on things we dont need. $10 million to Africa to show uncircumcised males how to clean their penis is just "the tip" of the iceberg. The United states IS A NET IMPORTER not a net exporter. Look at the things around you at this moment. How many were made in China? Therefore, while they devalue the dollar making our exports cheaper, but it will make the items we import more expensive and we import more than we export. Those industries needing imported materials will have their costs skyrocket and their profit margins reduced. Since imports outnumber exports, and it is the import side that is larger, this will negate the majority of gains in the export market. Just another ill advised governemnt  economic jerry  mandering that will have the usuall two or three unintended unexpected consequences. 

 

Nov 10, 2010 10:39PM
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The most effective way to reduce the unemployment rate is to quit paying people not to work for 2 years. It's common sense. Instead the redistibution of money from productive people to those who don't contribute continues aided by big goverment. This destroys any incentive anyone has to work.

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