Massucci's Take: Fed's Bernanke, Fisher have different roles, contrasting views

Two Federal Reserve leaders made contrasting speeches today. One said to look forward, while the other said to watch your back. Both are right.

Fed Chairman Ben Bernanke has taken a positive leadership role since his remarks a month ago on CBS News show `60 Minutes.' He has made a calculated and concerted effort to lead the way out of the U.S. financial crisis by shifting his focus forward.

Today, in a speech in Atlanta, he said, "I am fundamentally optimistic about our economy."

"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing," Bernanke said in his speech. He cited, "data on home sales, home-building, and consumer spending, including sales of new motor vehicles," as signs of evidence.

Federal Reserve Bank of Dallas President Richard Fisher chose to look backward, saying "economic data is quite grim" in the U.S., he said, adding that he expects "a contraction at a very dazzling rate in the first quarter."

Fisher spoke in Hong Kong earlier today. He made clear that he predicts the jobless rate in the U.S. may go higher than 10 percent.

It's a wonderful one-two punch of Fed speakers. On one hand, Bernanke reminds markets and investors to look forward, while Fisher says don't forget to watch your back.

Fisher, who voted for tighter monetary policy five times in the past year, is the leader among the Fed's 12 bank presidents around the U.S. in preaching caution. While Fisher has held firm in his reminders that the sky may still be falling, Bernanke has taken on the role of pointing to the skies and saying the clouds may be breaking.

The main question is, who is right? The answer is likely: both.

Just today, Bernanke and Fisher took the opposite sides in their own arguments.

Bernanke reminded folks in Atlanta that the recent financial crisis is "the worst since the great depression."

Fisher countered his own argument in Hong Kong, telling his audience the Fed's current policies would help end the U.S. recession.

It's a brilliant mix of good cop, bad cop. Bernanke steps forward and points to the sun rising in the east, while Fisher points to the sun setting in the west.

Each is wise to take these unique positions.

Intelligent for Bernanke, as the Fed chief, to point his group forward and lead the way optimistically out of the mire.

He told story about a business leader asking him what to tell his employees about the future, during these trying times.

"You should be realistic and talk about the long term opportunities at the company," Bernanke said, describing his answer. His response reflects the deliberate role he is taking as a leader who is making an effort to lead toward better times.

He even cited FDR's 1933 speech about fearing only "fear itself," which Bernanke said helped to restore confidence. "We need to restore the confidence as best we can," Bernanke said, plainly stating his position in 2009.

Without hesitation, he built upon his confidence-building role, saying, "Confidence is won," in part, by "showing results." He then illustrated his point, saying this U.S. is already seeing "considerable improvement."

Fisher, the most cautious of the dozen Fed presidents, can maintain his usual position by holding two hands backward to keep the bandwagon from filling up too quickly. He's preaching patience and discipline. The lack of both helped get the U.S. into this mess, after all.

Fisher, who doesn't vote on interest rates this year, is wise to remind folks that while things may be getting better, the worst of it -- if it is indeed in the past -- wasn't that long ago. There still may be pain from such deep suffering, he cleverly points out.

Beautifully orchestrated, deliberate or not, by Fisher and Bernanke today.

While both may be right, both, still, could be wrong. If so, they're covered -- however this drama plays out.

Anthony Massucci is a senior writer for DailyFinance. He previously covered the Federal Reserve for Bloomberg News.
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