German Analysts Optimistic About Bernanke | Business| Economy and finance news from a German perspective | DW | 01.02.2006
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German Analysts Optimistic About Bernanke

Top White House economic adviser Ben Bernanke takes over as chairman of the US Federal Reserve on Wednesday. In Germany, analysts are hopeful, but caution that he'll need time to settle in.


Bernanke becomes the world's most powerful central banker on Wednesday

The American public has seen more fat years than lean under Alan Greenspan, whose 18-year tenure spanned the 1990s economic boom and ended Tuesday. During the record 10-year expansion he created an atmosphere on Wall Street that made many feel he might keep growth running indefinitely.

The bursting of the high-tech bubble in 2000 and a subsequent mild recession tested investors' faith. But in his heyday, Greenspan calmly maneuvered the US economy through the crash of the stock exchange in 1987, through two recessions and the crisis after the terror attacks on Sept. 11, 2001. His work has earned him the Defense Department's Medal for Distinguished Public Service and praise from US President George W. Bush.

Alan Greenspan

Greenspan will turn 80 in March

"He has dominated his age like no central banker in history," Bush said. "He's contributed to a better life for all Americans and I thank him for his service."

A crash o n the way?

But it hasn't always been that way. Just after Greenspan took up his post as Federal Reserve chief, he had to tackle the 1987 crash on Wall Street. It was the largest one-day stock market collapse in history.

Other Federal Reserve leaders, like William Miller and Paul Volcker, also faced crises during their first days on the job. So, will the next Federal Bank leader, Ben Bernanke, bring bad luck?

Fidel Helmer, Manager of stock trading at Hauck & Aufhäuser Private Bank in Frankfurt said he doesn't think so.

60 Jahre Danach - Bildgalerie - New York City 07/20

Some of the world's most expensive real estate can be found in Manhattan

"There are, of course, still many question marks," he said. "Oil prices are extremely high, we have the problem with American automakers like General Motors and Ford, and the exploding real estate prices in the US. But we've known about these things for weeks and months now, so Mr. Bernanke taking up his post won't be the cause for this kind of crash."

Clearer tha n Gree n spa n

Bernanke is expected to be sworn in as the new Federal Reserve chief on Wednesday. Until now, he's been chairman of Bush's Council of Economic Advisers and is widely respected as a brilliant analyst.

But he's not a magician and will face a lot of problems to tackle. Frankfurt's analysts don't think he'll be able to raise or lower markets with the raise of an eyebrow.

"Greenspan didn't start out like he ended -- as an icon," said Dirk Apel of Weberbank. "I think that Bernanke will be clearer than Greenspan, the sphinx, who always knew when to disguise his strategy. We're very optimistic that Bernanke will fill the great footsteps that have been left behind."

A team player

US-Notenbankchef Ben Bernanke

He's expected to be more straight-forward than his predecessor

While Greenspan used to follow his instincts, Bernanke only trusts facts and analysis. But he's known to be a team player and to listen to differing opinions.

German finance analysts also expect Bernanke to formulate his goals more clearly than Greenspan, Helmer said.

"He certainly won't want to imitate Greenspan," Helmer said. "I think Bernanke will bring a different accent to Federal Reserve policies. He may focus more on monetary stability and a balanced budget. Greenspan focused much more on the stock market."

The outlook for monetary policy under Bernanke has become murkier after the US economy posted a surprisingly weak performance in the closing months of 2005. But many economists see it picking up smartly this quarter.

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