Bush names another “free market” ally of Wall Street to succeed Greenspan at the Fed

Bernanke was quick to reassure Wall Street that his appointment would not signal any significant shift from the policies pursued by the Federal Reserve for the past 18 years. “My first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years,” Bernanke told reporters following the White House announcement.

Stock prices shot up Monday on the news of Bernanke’s nomination for the top Fed post, with the Dow Jones industrial average rising 169.78 points, or 1.7 percent, the biggest rally in six months. The appointment is seen by Wall Street analysts as a sign that there will be no diversion from the economic principles of the Greenspan era—policies which have led to unprecedented wealth accumulation for a tiny elite and growing levels of poverty for masses of working people.

The appointment comes at a time of growing nervousness in financial circles over the state of the US and world economy, and these concerns have been heightened by the prospect of Greenspan’s retirement. Massive US budget, balance of trade and balance of payments deficits, soaring oil prices and an upsurge in inflation have roiled the stock market and fueled a sense of foreboding. These concerns were reflected in an editorial in Tuesday’s Washington Post which, while praising Bernanke, noted, “... he has never had to manage the response to the default of a country, the collapse of the dollar or the implosion of a big hedge fund, all crises that may lie in his future.”

The Hurricane Katrina disaster exposed the social devastation produced by more than a quarter century of unbridled capitalism, in which huge tax cuts for big business and the rich, the lifting of regulations on corporate profit-making, privatization and the gutting of the social safety net have undermined the country’s infrastructure and the ability of government to carry out elementary functions essential to modern mass society. The desperate plight of hundreds of thousands of trapped and abandoned residents of New Orleans underscored the worsening plague of poverty in the midst of staggering levels of personal wealth.

Yet two months later, the appointment of Bernanke, another right-wing exponent of “free market” policies, to head the most powerful banking institution in the world testifies to the determination of the American ruling elite to pursue the same socially destructive agenda, subordinating all public considerations to the further accumulation of private wealth.

Ben Bernanke, 51, has been an academic for most of his career, most recently as the head of the Department of Economics at Princeton University. He was appointed by Bush in 2002 to the Fed’s board of governors, where he served alongside Greenspan. This past June he was named by Bush to head the President’s Council on Economic Advisers.

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http://www.wsws.org/articles/2005/oct2005/fed-o26.shtml