Business

Bernanke’s still ready to $pend

The scratching of Triple Crown contender “I’ll Have Another” from the Belmont wasn’t the only disappointing headline this week; so too was the perception that Fed chief Ben Bernanke may have scratched his easy-money policy from his tip sheet between now and the election.

Investors were hoping that the world’s most powerful central banker would provide Wall Street’s version of a Triple Crown, by signaling he was ready for a third round of money printing — known as quantitative easing — in order to jump-start a stalling economy here in the US and help a stock market that has lost much of its 2012 gains.

On the face of it, Bernanke demurred, guardedly insisting before the cameras that the Fed has no immediate plans to inject further juice into the banking system. It was the second-best television performance of the week, topped only by Jared Harris’ shocking exit on last week’s “Mad Men.”

Yes, don’t believe for a minute that Helicopter Ben isn’t ready, willing and able to drop dollars this summer everywhere from Baltimore to Barcelona. The fact that he didn’t telegraph that plan on Thursday, six days after a dismal employment report rocked the White House and five months before the election, shouldn’t be a surprise.

The politically attuned former Princeton professor is wise enough to know that there will be plenty of opportunities to fire up the printing presses in the weeks to come, without looking like he’s doing anything to affect the election outcome in November. The situation is especially dicey given the fact that GOP candidate Mitt Romney has signaled he’d likely replace Bernanke if he becomes president.

Indeed, the central bank is already setting the stage for its next move. While Professor Ben played coy, Janet Yellen, an Obama appointee to the Fed, laid out the case for an imminent easing. In what likely will become a familiar refrain by Democrats in the run-up to Election Day, Yellen notes that “the European situation is already having a meaningful effect here in the US, further weighing on prospects for US growth.”

This puts in play a scenario that will allow the Fed chief to make the best out of a sticky situation of easing thisclose to an election.

At the very least, the European crisis will force the Fed to flood the banking system with money to sop up losses by US banks from their dealings across the pond. As the foremost student of the Great Depression, Bernanke will act — more to protect his reputation than his job.

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