Because it was my daughter's law school graduation, I heard this speech. I am surprised that a couple of bloggers linked to it, since Bernanke gave a personal talk, not a financial one. There was a large news media presence. What were they expecting--an announcement of a new interest-rate policy?
Bernanke and Krugman were in the same grad school class at MIT, I recall (I was a couple years later). As I read Geoffrey Miller's Spent and learn about the Big Five personality traits, I can see that Bernanke has always been higher on agreeableness that Krugman or me. In the spirit of being agreeable, I only made small talk when I went up to Bernanke after the speech.
But if I had been true to my nature, I would have asked two questions.
1. Every week, it seems, the Fed and the Treasury ask for (or just exercise) new powers. Will we ever see agencies ask for less power? If not, what is the logical limit of this process?
2. Every policy move seems to transfer wealth to bank shareholders and managers from other constituents. How does it turn out that it is always in the public interest to do this? In fact, I just saw this and this.
And unsurprisingly, you didn't see this
Krugman strikes me as above the median on Negative Emotionality. You, on the other hand, seem to be blow it. Observe the sort of adjectives that you both use. Yours are more subdued.
The thing that I have heard that is most concerning is that when TARP money is being repaid to the Fed or Treasury that these assets are being treated as something that can be "reinvested".
Seems to me that the US Gov is in a craps game (TARP) and every time they win a little they say let it ride. Mainly driven by the fact that they are playing with someone elses money and the casino owner (banks) is their good friend whom they get plenty of VIP treatment.
I would not presuppose that the US Gov could not come home with a winfall, but the casino is in business of taking other peoples money for the thrill of the small chance of great gains.
In the spirit of being agreeable, I only made small talk when I went up to Bernanke after the speech
I believe that is what is called an "output gap". Or perhaps "deadweight loss".
1. Unused omnipotence. People had the power to prevent this yet sat on their hands doing nothing. Exercising power is work unless it is made mindless. People like mindlessness. They don't like to think, which is what power is really all about.
2. They are just government utilities with better pay and benefits.
The government is actually being reasonable (in its way) about the warrants. Don't forget that they were granted at gunpoint. To acquire them the way they did then hold the banks' feet to the fire over them apparently lies beyond a point on the thuggishness spectrum that the government is so far not willing to cross.
How does it turn out that it is always in the public interest to do this?
See, this is why your readership keeps coming back. Just about any other commentator would make the same point by ranting or frothing at the mouth. But your formulation is so understated it's actually funny.