Aug. 2, 2010
BOOK REVIEW: Updated Paperback Edition of 'In Fed We Trust' Assesses Efforts of Bernanke, Geithner and the Other 'Musketeers' in Attempting to Prevent 'Depression 2.0'
Reviewed By David M. Kinchen
In repeating the mantra "Whatever It Takes" to save the country from "Depression 2.0", Federal Reserve Chairman Ben S. Bernanke is unconsciously -- or maybe consciously -- channeling the similar statement of the Richard Crenna character in the 1981 film "Body Heat" as he tells the William Hurt character he became rich by doing "whatever it takes."
Of course, Edmund Walker, played by Crenna, ends up dead because of the "whatever it takes" efforts of small town lawyer Ned Racine, played by Hurt, and Edmund's femme fatale wife Mattie, played by Kathleen Turner. Lawrence Kasdan's "Body Heat" is a perfect film noir, the 1980s equivalent of "Double Indemnity."
Veteran Wall Street Journal reporter David Wessel recounted the effort in last year's "In Fed We Trust" (Crown Business) and updates it with an epilogue in the quality paperback edition of "In Fed We Trust: Ben Bernanke's War on the Great Panic" (Three Rivers Press, 352 pages, $16.00).
Dillon, SC native Bernanke vowed to do "whatever it takes" from the Fed as the worst financial panic in more than fifty years gripped the world and he struggled to avoid the once unthinkable: a repeat of the Great Depression that Wessel calls "The Great Panic." A brilliant but cautious academic at Princeton University before he was named Fed chairman in 2006 to replace the sainted Alan Greenspan, Bernanke researched and wrote about the causes of the Depression during his career as an academic. When the financial meltdown thrust him into a role as one of the most important people in the world, he was compelled to act with audacity by circumstances he never anticipated.
The president of the United States can respond instantly to a missile attack with America’s military might, but he cannot respond to a financial crisis with real money unless Congress acts. The Fed chairman can, especially if he's willing to stretch the rules. Bernanke finally overcame his initial caution and did "whatever" it took. Under his leadership the Fed spearheaded the biggest government intervention in more than half a century and effectively became the fourth branch of government, with no direct accountability to the nation’s voters. His actions drew fire from both ends of the political spectrum, but Wessel -- who works for a newspaper owned by the same company that owns Fox News Channel -- says that the basic story remains the same: "The United States found itself at the edge of the abyss and was pulled back in large measure through the efforts of the Federal Reserve."
Believing that the economic catastrophe of the 1930s was largely the fault of a sluggish and wrongheaded Federal Reserve, Bernanke was determined not to repeat that epic mistake. Wessel tries to shed some light on the Fed's opaque and undemocratic inner workings -- it's been called "the Creature from Jekyll Island" referencing the 1910 meeting on the South Carolina island where the Fed's concept was developed -- while revealing how Bernanke quarterbacked the effort to prevent the world’s financial engine from seizing up.
In piecing together the fullest, most authoritative, and alarming picture yet of this decisive moment in our nation’s history, "In Fed We Trust" answers the most critical questions. Among them:
• What did Bernanke and his team at the Fed know – and what took them by surprise? Which of their actions stretched – or even ripped through–the Fed’s legal authority? Which chilling numbers and indicators made them feel they had no choice?
• What were they thinking at pivotal moments during the race to sell Bear Stearns, the unsuccessful quest to save Lehman Brothers, and the virtual nationalization of AIG, Fannie Mae, and Freddie Mac? What were they saying to one another when, as Bernanke put it to Wessel: “We came very close to Depression 2.0”?
• How well did Bernanke, former treasury secretary Hank Paulson, and then New York Fed president Tim Geithner perform under intense pressure?
• How did the crisis prompt a reappraisal of the once-impregnable reputation of Alan Greenspan?
Wessel covers a lot of the same ground as other authors, including former Goldman Sachs CEO and former Bush 43 treasury secretary Hank Paulson in his memoir "On The Brink," and Suzanne McGee's "Chasing Goldman Sachs" -- both reviewed by me (see links below), but I think he wraps up the whole crisis extremely well -- and gives an excellent description of how the Fed is organized and how it works. This is to be expected from the economics editor of the Wall Street Journal and a writer who's shared two Pulitzer Prizes. Wessel can also be heard commenting in economic and financial matters regularly on NPR.
I also reviewed Rep. Ron Paul's "End The Fed" last September. Paul's efforts to bring more transparency to the Fed are mentioned by Wessel, who says the Fed is lobbying hard to keep its secrets away from the prying eyes of Paul, R-TX, and Congress -- and the American people.
My review of "On The Brink": http://archives.huntingtonnews.net/columns/100225-kinchen-columnsbookreview.html
My review of "Chasing Goldman Sachs": http://archives.huntingtonnews.net/columns/100717-kinchen-columnsbookreview.html
My review of "End The Fed": http://archives.huntingtonnews.net/columns/090916-kinchen-columnsbookreview.html
Wessel's website for his book: www.infedwetrust.com
Publisher's website: www.threeriverspress.com
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BOOK REVIEW: Updated Paperback Edition of 'In Fed We Trust' Assesses Efforts of Bernanke, Geithner and the Other 'Musketeers' in Attempting to Prevent 'Depression 2.0'
Reviewed By David M. Kinchen
In repeating the mantra "Whatever It Takes" to save the country from "Depression 2.0", Federal Reserve Chairman Ben S. Bernanke is unconsciously -- or maybe consciously -- channeling the similar statement of the Richard Crenna character in the 1981 film "Body Heat" as he tells the William Hurt character he became rich by doing "whatever it takes."
Of course, Edmund Walker, played by Crenna, ends up dead because of the "whatever it takes" efforts of small town lawyer Ned Racine, played by Hurt, and Edmund's femme fatale wife Mattie, played by Kathleen Turner. Lawrence Kasdan's "Body Heat" is a perfect film noir, the 1980s equivalent of "Double Indemnity."
Veteran Wall Street Journal reporter David Wessel recounted the effort in last year's "In Fed We Trust" (Crown Business) and updates it with an epilogue in the quality paperback edition of "In Fed We Trust: Ben Bernanke's War on the Great Panic" (Three Rivers Press, 352 pages, $16.00).
Dillon, SC native Bernanke vowed to do "whatever it takes" from the Fed as the worst financial panic in more than fifty years gripped the world and he struggled to avoid the once unthinkable: a repeat of the Great Depression that Wessel calls "The Great Panic." A brilliant but cautious academic at Princeton University before he was named Fed chairman in 2006 to replace the sainted Alan Greenspan, Bernanke researched and wrote about the causes of the Depression during his career as an academic. When the financial meltdown thrust him into a role as one of the most important people in the world, he was compelled to act with audacity by circumstances he never anticipated.
The president of the United States can respond instantly to a missile attack with America’s military might, but he cannot respond to a financial crisis with real money unless Congress acts. The Fed chairman can, especially if he's willing to stretch the rules. Bernanke finally overcame his initial caution and did "whatever" it took. Under his leadership the Fed spearheaded the biggest government intervention in more than half a century and effectively became the fourth branch of government, with no direct accountability to the nation’s voters. His actions drew fire from both ends of the political spectrum, but Wessel -- who works for a newspaper owned by the same company that owns Fox News Channel -- says that the basic story remains the same: "The United States found itself at the edge of the abyss and was pulled back in large measure through the efforts of the Federal Reserve."
Believing that the economic catastrophe of the 1930s was largely the fault of a sluggish and wrongheaded Federal Reserve, Bernanke was determined not to repeat that epic mistake. Wessel tries to shed some light on the Fed's opaque and undemocratic inner workings -- it's been called "the Creature from Jekyll Island" referencing the 1910 meeting on the South Carolina island where the Fed's concept was developed -- while revealing how Bernanke quarterbacked the effort to prevent the world’s financial engine from seizing up.
In piecing together the fullest, most authoritative, and alarming picture yet of this decisive moment in our nation’s history, "In Fed We Trust" answers the most critical questions. Among them:
• What did Bernanke and his team at the Fed know – and what took them by surprise? Which of their actions stretched – or even ripped through–the Fed’s legal authority? Which chilling numbers and indicators made them feel they had no choice?
• What were they thinking at pivotal moments during the race to sell Bear Stearns, the unsuccessful quest to save Lehman Brothers, and the virtual nationalization of AIG, Fannie Mae, and Freddie Mac? What were they saying to one another when, as Bernanke put it to Wessel: “We came very close to Depression 2.0”?
• How well did Bernanke, former treasury secretary Hank Paulson, and then New York Fed president Tim Geithner perform under intense pressure?
• How did the crisis prompt a reappraisal of the once-impregnable reputation of Alan Greenspan?
Wessel covers a lot of the same ground as other authors, including former Goldman Sachs CEO and former Bush 43 treasury secretary Hank Paulson in his memoir "On The Brink," and Suzanne McGee's "Chasing Goldman Sachs" -- both reviewed by me (see links below), but I think he wraps up the whole crisis extremely well -- and gives an excellent description of how the Fed is organized and how it works. This is to be expected from the economics editor of the Wall Street Journal and a writer who's shared two Pulitzer Prizes. Wessel can also be heard commenting in economic and financial matters regularly on NPR.
I also reviewed Rep. Ron Paul's "End The Fed" last September. Paul's efforts to bring more transparency to the Fed are mentioned by Wessel, who says the Fed is lobbying hard to keep its secrets away from the prying eyes of Paul, R-TX, and Congress -- and the American people.
My review of "On The Brink": http://archives.huntingtonnews.net/columns/100225-kinchen-columnsbookreview.html
My review of "Chasing Goldman Sachs": http://archives.huntingtonnews.net/columns/100717-kinchen-columnsbookreview.html
My review of "End The Fed": http://archives.huntingtonnews.net/columns/090916-kinchen-columnsbookreview.html
Wessel's website for his book: www.infedwetrust.com
Publisher's website: www.threeriverspress.com
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