Blogs by Robert M. Liu
A Simple Quick Fix for the Crisis
10/9/2008 12:24:34 AM
Everything is down because of one man. That man is Fed Chairman Bernanke. Fire him or make him resign will restore confidence and reserve the current negative market psychology.
A Simple Quick Fix for the Crisis
-- by Robert M. Liu
The economy has tanked. The stock market has crashed. The U.S. dollar has been trashed. The price of gold has jumped over US$900 per ounce. Global investors’ confidence in the Federal Reserve has vaporized. The credibility of the U.S. government has plummeted And there seems to be no light at the end of tunnel.
But I believe there is a simple, quick fix for the crisis. That is to fire Fed Chairman Bernanke or make him go away, and then invite Paul Volcker back to the Federal Reserve as its chairman. This would give the market a signal that the administration’s strong dollar policy is for real. Once investors' confidence in the U.S. dollar is restored, everything else will fall into place. Dollar-denominated assets including U.S. stocks will rebound.
Paul Volcker as Fed Chairman would symbolize America’s determination to fight inflation and maintain the value of the dollar. The world watched him succeed in curbing inflation more than two decades ago. His return would immediately reverse the current negative market psychology.
Financial markets are about psychology. Bernanke has created a terrible market psychology. His face is the symbol of market misery. The world has lost confidence in this man. Why should the Bush administration hold on to this man? The appointment of Bernanke has been the Administration's fatal mistake. Make Bernanke go away, or the Republican Party will lose everything come November. It wouldn’t even be able to keep the shirt on its back. Make Bernanke resign before it’s too late, Mr. President. I beg you!
Oct. 9, 2008
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