Ivory Tower

Federal Reserve Chairman Ben Bernanke said Tuesday that the recession that’s plagued the country for the past year “is very likely over at this point.”

We’ll see.

Many positive signs could support the Fed chief’s announcement; economic indicators are still sluggish, but their rate of decline has slowed. At least the stock market has started to improve, but it’s still; a bit spastic. Many of the sales could be speculators scooping up securities with depressed prices. Secured debt is still selling short.

In addition, unemployment hasn’t begun to rebound, and that means that many of the core element of any economy — consumers with disposable income — still hasn’t begun to grow. Indeed, many workers with jobs have taken pay cuts and endured unpaid furloughs, so even they have less money to spend.

It’s worth noting that this is at least the third time Bernanke has announced an official end to the recession. Makes one wonder if he’s trying to pull a Greenspan.

Former fed chief Alan Greenspan was so influential that if he sneezed, the markets tanked over fears that he might be coming down with something. If he announced the recession was over, Wall Street probably would have rallied to the point of actually pulling the economy out of the doldrums.

Bernanke doesn’t have that power, however. Unfortunately for him, it wasn’t the position that was so influential, it was Greenspan himself. Bernanke doesn’t inspire that kind of confidence among the nation’s financial movers and shakers.

So the previous two ploys, if they were ploys, didn’t work. And if they were ploys, they exposed Bernanke as a manipulative wonk who tried to force the issue, and failed. It’s worse if they weren’t ploys, since that would expose our nation’s top economic official as someone who misreads the indicators and doesn’t know when a recession actually ends.

Either way, it was a bad display of Keynsianism.

Because of this, Bernanke’s latest announcement might well backfire, if its seen as yet another cynical effort to make the economy rebound by force, rather than by just letting it heal on its own.

Chances are the investors will simply ignore his latest proclamation, and the economy will start to once again grow when it’s good and ready — that is, when it has rebuilt a solid base and can maintain its growth.