Someone get Bernanke a Zoloft
I believe that Fed Chairman Ben Bernanke cares about me. Those dark, deep-set puppy eyes, the beard that hides the pain, that Benedictine haircut that must be self-induced punishment for something -- the dude oozes empathy. If I needed $100, I would definitely ask Bernanke. Or I might just take it from him. Bernanke does not look like a tough guy.
That’s the problem. Bernanke cares too much.
The Fed’s job is simple: Don’t let the economy get too excited or too depressed. To do that, it gives the nation a steady supply of economic Zoloft. But Bernanke seems freaked out that his meds aren’t working, and now he’s getting taken advantage of. And because he uses taxpayers’ money, we’re getting taken advantage of. For two weeks, he’s been acting like it’s the last scene of “It’s A Wonderful Life,” only instead of giving cash to a kindly if slightly schizophrenic George Bailey, he’s giving it to investment bankers. So really, it’s nothing like “It’s a Wonderful Life” and a lot like “Scarface.”
Last week, Bernanke gave these investment banks $200 billion -- a quarter of everything the Fed has -- as a loan in exchange for mortgage securities no one wants anymore. In doing so, he was brazenly “ignoring the moral hazard,” which is an economic term for letting big companies know they can take insane risks and get bailed out by the government if it doesn’t go well. This is also an economic term for screwing the little guy.
Then, Sunday night, in a mad rush to prevent a panic before global stock markets opened, Bernanke gave a ton of cash to JPMorgan Chase & Co. so it could buy Bear Stearns. That’s got to be a sweet phone call to get from the government. “No, no, guys -- not calling about taxes or trading infractions. Just -- crazy question -- we were sitting here and talking, and we wondered if you’d be interested in a huge wad of cash to buy your fiercest competitor? Really? Great. Also, we wanted to invite you to come over and have sex with us and never call us again if you don’t feel like it. We’ve got ice cream!”
So for just $2 a share -- a $28 savings from Friday’s price -- JPMorgan got 14,000 super-smart, super-mean employees, $570 million worth of a building in midtown Manhattan and $30 billion from the Fed. If Bernanke had just called me on Sunday, I totally would have bought Bear Stearns. Mostly to boss around all those jerky frat guys from college who work there now. “Josh, I’m going to need you to leverage the derivatives on lower-back hair. Can you do that by 5?”
Then on Tuesday, Bernanke dropped the short-term interest rate to 2.25% -- half of what it was six months ago -- making it super-cheap to borrow money. The man has done more in the last month than any Fed chief ever. He has nearly proved the long-held theory that even if a Federal Reserve chief saved the planet, it would not make him any sexier.
All of his extreme action is predicated on the myth that we’re entering the Second Great Depression. We’re not. The run on investment banks Bernanke thought would occur this week didn’t happen. In fact, if he had waited just two more days on the Bear Stearns giveaway, he would have seen that Tuesday’s earning reports from Goldman Sachs and Lehman Bros. were so unexpectedly good that the Dow shot up 420 points.
More important, nobody besides the Fed is panicking. People are bummed because their houses are worth less, but people were bummed because their tech stocks were worth less, their alpacas were worth less and their Ugg boots were worth less. But your average American isn’t freaking out. A CNN poll this week showed that people’s main economic fear is inflation -- which is what you get when you print a lot of money, like the Fed is essentially doing by giving so much away. It makes money fun to borrow and not worth saving, which is how the trouble started in the first place. Plus, it makes the dollar fall, allowing Canadians to make fun of us.
I appreciate the Fed’s frantic gestures, but housing prices really are plummeting, and I’d rather hit that bottom as soon as possible. It’s a hard choice, but I’ll take lower inflation, less national debt and a stable future over job growth right now.
So somebody has got to calm the dude down. Take him for a spa day. Or on a pub crawl. I can see Bernanke getting really into yoga -- not the sweaty sauna kind but the one where you chant a lot of nonsense at the end. Better yet, invite the guy to join your fantasy baseball league. You know he’ll overpay for A-Rod.