Bernanke is a Bit Cranky

Quote of the day:
"There is no present or future, only the past, happening over and over again, now."
--Eugene O’Neill

Ben Bernanke, the chairman of the Federal Reserve, can’t get no respect.

Everyone--or at least everyone who cares--tries to divine the future by listening between the letters to every word he speaks.

We are singularly and obsessively interested in the economic future, about which we have no information. We are little interested in the past, about which we have infinite information.

The present? Forget it. We know our own present--why do we need to know anything else?

Too bad. When I watched Bernanke’s testimony before the joint congressional economic committee last week, I was very impressed. He very clearly explained the current situation in the credit markets. He was reasonable and down-to-earth, using a minimum of arcane economic terms.

He described the reality that many of us see going on around us every day. Home sales have slowed down. Some of those who bought two to three years ago with adjustable rates are facing payments they can’t afford.

He said that extending subprime credit has significant benefits, including enabling home ownership among people who otherwise wouldn’t qualify. But some institutions had overdone this, and they are increasingly suffering the consequences.

And then he said something that really should be at the top of the news. He said that economists are very bad at predicting trends. They predict because we loudly and endlessly demand it. But they are always wrong.

So what’s the point of strenuously fixating on predicting the future? No one, especially trained economists, can do that. They’ve never been able to predict. Do we think somehow the ability will magically arrive?

I suggest we all try to just get a grip on what we can know, which is the bigger-picture present and the past. Maybe we can learn from it.