Seven-and-a-half years into Ben Bernanke's tenure atop the Federal Reserve and most people would characterize his time at the central bank as trying, strewn with crisis, and filled with unprecedented high stakes initiatives designed to get us through a recession and stave off a double dip.
And yet, it wasn't always that way.
As Nick Colas, chief market strategist at ConvergEx Group explains in the attached video, when the former Princeton professor took the job in February 2006, growth was robust, housing was hot, and employment was full. In short, things were good, at least until the curse of the new Fed chairman took hold.
"If you look back in time, the Fed chairman is always tested in their first year to 18-months," Colas says. "One of the first things the market does is figure out how to needle him and see how good he (or she) really is."
For Bernanke, the test was, of course, the biggest financial crisis since the Great Depression and an economic washout so severe that his expertise in Depression-era economics suddenly became relevant in modern times.
Before him, Alan Greenspan was at the helm for just two months after being sworn in on August 11, 1987 when the worst stock market crash in modern times occurred.
"Poor Dr. Greenspan," Colas says of the market's historic 22% Black Monday bludgeoning in October 1987. "He had a tough day."
Scrolling back to August 1979 and a newly minted Paul Volcker had just left the Federal Reserve Bank of New York to take charge of the mother ship in Washington, courtesy of President Jimmy Carter's nomination.
As Colas points out, by November of that year, the Iranian hostage crisis began, causing oil prices to rise, and in turn, stoking already high inflation and double-digit unemployment. Eventually Volcker would hike the Fed funds rate to 20% by mid 1981 before slowly bringing the problem under control.
Colas says there are similar anecdotes going further back in time, but was is important to remember now is not so much who will ultimately hold the job, but rather how they will respond in the face of crisis, or should we say curses?
"There are so many different tripping points out there in the economy, whether it be rates, the job market, whether it be Europe, slowing China, the (Abenomics) experiment in Japan," he says. "There are a lot of different levers to pull that could create the next challenge for our new Fed chairman."
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