Ben BernankeEver since last summers meltdown of the Quants and Hedge Funds, Ben Bernanke has failed to see the signs of structural weakness in the financial system, and to take the appropriate -pre-emptive (not reactive) action. Beyond this, he has failed to project credible leadership when making statements such as the one earlier this year, where he emphatically said the FED would be aggressive in its actions to stem a U.S. recession.

The markets today are reacting as much to the gloomy prospects of a deep U.S. Recession and Disinflation – [Disinflation = the opposite of inflation – commodity prices going lower], as they are about the perceived weakness in leadership and credibility in the U.S. Federal Reserve to keep to its stated word.

Many years ago, I learned that markets are driven by ‘˜perception’ more so than reality. ‘œIn sex, drugs and rock n roll, perception is 9/10ths of reality,’ said one high school child of the 60’s market participant. Today the markets are being driven by several perceptions, but in my humble opinion, mainly – and more and more each day – by that of leadership paralysis at the FED.

Bernanke must start to behave like a FED Chairman and a leader, in the Paul Volker and Alan Greenspan, (hate or love Greenspan – he understood the markets), or go back to academia and write books on economic theory.

Unless, Ben Bernanke takes a big gulp of ‘˜courage’, I would vote to replace Ben Bernanke with Tim Geithner – president of the NY FED, who has been pointing to the Sub Prime loan problems as early as February 07.

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Walter Schubert, a third generation member of the New York Stock Exchange is the Founder and CEO of GFN.com: The Gay Financial Network.