Ben Bernanke is retired and happy, as the former Federal Reserve Chairman is quick to tell anyone listening. And while he no longer has to worry about the current state of the US economy – that’s Janet Yellen’s job now – he is still giving the 2008 crisis a lot of thought. So much, in fact, that he is writing a book about it: a memoir of sorts to serve as a written record to make sure everyone has the story straight.
So it’s a good time to ask: what story is that, exactly?
It’s time to start negotiating.
Concerned with their legacies, the main actors in the unfolding drama of the 2008 financial crisis have been intent on the public knowing exactly how they believe it happened. Former Treasury secretary Tim Geithner wasted no time before going on a tour to defend his role in the bailouts. These tours and book by the main players are specifically to help historians “see” what they were seeing and to defend their role in history.
Bernanke is no exception. He took the stage at Radio City Music Hall as the closing speaker for the 2014 World of Business Forum. He used most of the hour-long session to defend his role in the response to the financial crisis and to express optimism about the current state of economy.
Asked who was to blame for the 2008 financial crisis, he pleaded for some understanding from historians, saying:
Nobody is going to come out looking all that good, I tell you, when historians write it, but again I ask only for those future stories to think in real time and don’t impose the retrospective knowledge on what we were seeing as we went through the crisis.”
“I would just talk a little bit about the experience of Lehman weekend, because there is a lot of revisionism out there,” Bernanke told an audience in New York on Wednesday, “This kind of a view that says: ‘Well, everybody knew that Lehman should be protected and not allowed to fail, but the Fed and Treasury they went ahead and let it fail anyways.’ That’s really got the history exactly backwards.”
Even as Bernanke works hard to ensure his legacy is portrayed in a more positive light, there is a feeling that most Americans could not care less.
“You know, according to a recent poll, 17% of the population still thinks that Alan Greenspan is the chairman of the Federal Reserve. So I must have made a big impression,” Bernanke joked Wednesday, referring to a Pew Research Center poll that came out earlier this month.
Bernanke, the door-to-door salesman of the recovery
Bernanke painted himself as a salesman – one who has to sell the message of recovery to the public. It’s something he feels he hasn’t done well.
One of the parts of being a Fed chairman that Bernanke found to be a bit difficult is communicating with three different audiences simultaneously: the markets, the US Congress and the public.
He suggested that he felt burdened by the weight of what he could say and its effect on markets.
“I realize that it isn’t my words that matter, it’s the fact that the Fed chairman has influence on monetary policy it does mean you have to take care [with the words],” explained Bernanke.
Bernanke almost seemed to live in fear that his words would have an impact on the stock markets.
Moving the market is not a great thing, because if you are communicating clearly and people understand what you are doing, then you shouldn’t be surprising the market very much.”
To communicate the Fed’s take on the recovery with the rest of the America, he opted to go on shows like 60 Minutes, but the job was too big for just a few television appearances to fix.
For a while there, the Fed was well below the IRS in popularity – and I tried to respond to that by going on 60 Minutes and doing other public venues – which I thought was very important because we needed to explain to the public what we were doing, why we were doing it, and why it was in the broader public interest for us to be doing these things. You know, I had a lot on my plate and I wish we could have done even more and gotten better understanding in the public about what we were doing.”
Salesmanship and reality
The reason for Bernanke’s disappointment might be that Americans are still not buying what he’s selling.
Main St and the average Americans are still not feeling this so-called recovery. Despite the fact that the recovery began as early as June 2009, about 46% of Americans still think that the US is in recession. This month unemployment rate has dropped below 6% for the first time since July of 2008, but there are still 6.3 million people who are long term unemployed. Another 7.1 million of workers are working part-time jobs because they cannot find a full-time job. American pay checks are at levels not seen since 1995.
After the recession, the Fed was overoptimistic about the pace of the recovery, admits Bernanke. He is, however, optimistic once more.
According to him, the US economy is beginning to show “the kind of immense sustainability that we haven’t seen in quite a while.” And he is “fairly optimistic that this will continue” and that the US is on its way to full employment.
He is not the only one. According to an economist Bill McBride, 2014 is on its way to be the best year for job creation this century. President Barack Obama has been touting America’s recovery for the past few weeks.
Speaking at the Northwestern University on 2 October, he praised the recent drop in unemployment and the recent job creation, which has been at the rate of about 200,000 jobs a month.
Over the past four and a half years, our businesses have created 10 million new jobs; this is the longest uninterrupted stretch of private sector job creation in our history. ... Right now, there are more job openings than at any time since 2001. All told, the United States has put more people back to work than Europe, Japan, and every other advanced economy combined.
These numbers mean little to the Americans, who are not feeling the recovery in their communities. Even the President couldn’t ignore that when making his speech.
“At the same time, it’s also indisputable that millions of Americans don’t yet feel enough of the benefits of a growing economy where it matters most – and that’s in their own lives,” he said. That, however, is not just a result of the Great Recession, but also of “the profound erosion of middle-class jobs and incomes”, said Obama.
The forgotten millennials
In an election year, it’s not surprising that the Obama administration is reaching out to the young voters who helped vote the president into office.
Yesterday, Obama met with the founders of number of start-ups and gave a speech about millennials and their role in the economy.
But millennials, too, seem skeptical of anyone peddling a message of economic recovery.
Americans who are 18 to 34 years old have especially been affected by the 2008 financial crisis. Weighed down with student loans, they struggle to find jobs and often end up underemployed, taking jobs just to earn a paycheck at the end of the month so they have some way to start paying down their debt.
The message seems to be that a good economic recovery won’t come into existence from spinning a positive narrative or selling a good story. Those protecting their legacies – from presidents to Fed chairmen to Treasury secretaries – seem to be telling the story of a world that has diverged significantly from the reality that many Americans feel. Stop selling, Americans seem to be saying, and start doing.
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