Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
« Agnico-Eagle Mines Limited: Outperforming SPDR Gold Trust | Main | Gold Poll: The Grandich, Soros, Nadler, Challenge »
Tuesday
Feb232010

Is Ben Bernanke Smart Enough to Be a CEO?

Ben Bernake.JPG



By Vedran Vuk, Casey Research



Ben Bernanke has got to be laughing it up after being reappointed to another term as Federal Reserve chairman. What else could we expect from the ex-lawyers and lifetime Beltway bandits voting on global monetary policy?

As he starts his second term, I’m once again reminded about how supremely unqualified this man is for the job. Prior to becoming Fed chairman, Ben Bernanke basically had zero experience outside academia. His resume only includes three full-time years working for the Federal Reserve and eight months on George W. Bush’s Council of Economic Advisors. The other 23 years of his career were spent teaching college.

A successful publicly traded company could never choose a similar candidate. Imagine a company announcing, “We’re changing CEOs. Our new choice is an excellent professor of management from Princeton. His organizational skills include writing a syllabus, assembling textbooks, and publishing in academic journals with no real-world consequences. Further, our candidate has worked for three years in a government-like position and eight months in the White House.”

As an investor, I would flip out. Yet, this is the exact guy responsible for setting the entire country’s interest rates. To take a further look at Ben Bernanke, I think that we should use Doug Casey’s own 8 P’s of investing in resource stocks applied in our publications, such as the International Speculator. 

One of Doug’s most important P’s for choosing a company is People. So, how would Bernanke fare should we apply these same standards to him?
Doug points out,

“To state the obvious, Boy Scout virtues like honesty, thrift, courage, and diligence are always good traits for your management teams, as are competence, knowledge, experience and, perhaps most importantly, a track record of success.”

Let’s start with honesty, competence, and a track record of success. As this great YouTube compilation of Bernanke quotes shows, the chairman has a track record of being wrong on just about everything – including  the housing bubble, economic fundamentals, and risky bank loans. That pretty much rules out “track record of success.” 

This leaves only two options for his character – either he’s an honest idiot or a malicious genius. Regardless, he would fail at least two of the three above-mentioned characteristics.
Let’s continue with diligence and thrift. He has been very diligent about printing piles of money to alleviate his deflationary phobia. Maybe that’s a partial credit there. Thrift… please highlight it and make a bookmark in the dictionary. Then, ship the copy to the Fed.  

Well, what about courage? Not only does Ben seem to lack confidence in front of crowds – a strange characteristic for a 23-year college professor – but he’s a complete pushover as well. Whenever the market dips slightly, Bernanke comes out promising endless liquidity and infinitely low interest rates. I’m not sure that we’ve ever had a more cowardly Fed chairman. Bernanke has to be the complete opposite of the tough-as-nails Volcker who raised interest rates to double digits without even flinching. 

On knowledge, I will give him some credit. He’s written a bunch of academic articles and has surely read a lot of books on macroeconomics. But his complete lack of first-hand market experience prevents him from really utilizing that knowledge. Plus, if he really knew so much about interest rates, he would have spent more time making money and less time teaching.
Experience is the key. Think MBA programs in business. Why do these programs help so many managers when the topics covered are nearly identical to undergraduate programs? It’s because the second time around in school, students come to the classroom with experience. The synergy between education and experience is the key. Education alone is useless.
Ultimately, out of the eight characteristics that Doug mentions, Ben Bernanke fails about six or seven. This guy could never make it as a CEO. Yet the man continues leading the country into disaster as the chief executive for U.S. interest rates. This would almost be too funny were it not so frightening.

Bernanke may not pass Doug Casey’s diligent 8 Ps test… but the companies recommended in Casey’s International Speculator sure do. Investing in the best of the best junior resource stocks is a good way to safeguard your assets from the meddling and – let’s face it – downright stupidity of the government. Click here to learn more.




All the best.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

For those interested in getting a bit more bang for your buck and adding a touch more excitement to your portfolio, then check out our Options Trading Service please click here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (4)

Dear Mr. Vedran Vuk,
If you were the Chairman of Fed what could you do ? If the economy collapse will the small cap resource companies fly ? When economy collapse people need job, food,... not gold for sure !!!

February 24, 2010 | Unregistered CommenterJason

If you told me that Bernanke was CEO operating a pushcart in lower New York I would feel better about his qualifications for the job. But, then again, look at his boss who had zilch experience and he got elected. Now we suffer the consequences and there probably will be a parallel with Bernanke. Anyway, does anybody know what the 38 or so Czars are doing lately to earn their magnanimous salaries? We have a right to ask, as they do work for us don't they?
John

February 24, 2010 | Unregistered CommenterJohn Ell

Look what kind of people we have put in the white house the past 60 years! Ike was the last one who had any real long-term leadership experience. The others since then have been born wealthy with no real world struggles, lawyers, actors and in general, just party puppets.

February 24, 2010 | Unregistered CommenterDave

'Smart' is a quality you are born with, 'Smart is a requisite for the job of Fed Chairman. 'Smart does not come from knowledge or position. So, the question that should really be asked is "Where was Ben Bernanke when the Almaighty was handing out the quality of being 'Smart'?

February 26, 2010 | Unregistered CommenterRoger Levinson

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>