Send "Helicopter Ben" In For A Blade Sharpening....

Ever since President Bush nominated Ben Bernanke to replace Alan Greenspan as head of the Federal Reserve, I've been concerned about Bernanke's lack of experience with the daily guts of the financial markets. After today, I'm worried about his common sense as well. Today the stock market reversed sharply to the downside after a CNBC anchor reported that over the weekend Bernanke told her the market had misinterpreted the last Fed statement. Essentially, Bernanke's do-over means that the Fed is more likely to keep raising rates, or to resume raising after a brief pause. I guess Bernanke didn't like how treasuries, the dollar, and gold reacted to the last Fed statement.

This raises serious questions about our new Fed chief. He just testified to Congress about interest rates and the economy. If today's report was in fact accurate, what in the world was he doing making offhand comments to a CNBC reporter at a dinner party?

Students of market history may recall a similar gaffe by a greenhorn Fed chief in 1987. The late Jude Wanniski wrote:

Greenspan had only been chairman for a few months when Sylvia Nasar, then of Fortune magazine, asked him for an interview, and Greenspan agreed. (It was the last interview he has given to an individual publication for direct quotes.) In it, the Fed chairman stated his belief that the dollar was overvalued and would have to be devalued at the rate of 2% a year for some years until it got where he wanted it to be. Did he know he was telling Fortune readers that he either did not know about the Louvre Accord or did not care about it? My guess is that he was just as naive as former Texas Senator Lloyd Bentsen was when appointed Treasury Secretary by President Clinton in 1993. Remember when Bentsen said at an open mike that maybe the dollar was overvalued compared to the Japanese yen, and the currency markets shook for two days? A meek Bentsen promised never to do that again. In any case, the Fortune interview began appearing in Wall Street mail boxes at the end of the week before the Monday Crash.

Barry Ritholtz has more here about the predictive ability of the man with arguably the most important job in the nation.

A less than auspicious start for Ben Bernanke, to say the least.