Silicon valley and other environs says Goodbye Greenspan, Hello Bernanke! First vote of confidence from an economic sectore

Date:   10/28/2005 5:38:08 AM ( 19 y ago)

Bernanke Pick Boosts Tech

Technology leaders express confidence that Bernanke won’t rock the economic boat.
October 24, 2005

Tech industry bigwigs see a friend in Ben S. Bernanke, President George W. Bush’s pick for chairman of the U.S. Federal Reserve, saying Monday the chief White House economist is likely to continue a similar course charted by predecessor Alan Greenspan.



Mr. Bernanke, a former Federal Reserve Governor and an economics professor at Princeton University until his appointment to the White House this year, does not have specific technology-industry experience. But observers expressed confidence his policy perspective would not depart radically from Mr. Greenspan’s.



“Bernanke is a well-known quantity,” said Donald Straszheim, former chief economist for Merrill Lynch and Co. and now president of Straszheim Global Advisors, an economic analysis and research firm focused on the Chinese economy. “He’s not likely to pursue policies, it seems to me, that a large group would think are way out in the fringe or in left field. He’s a mainstream guy.”


‘We know he’s sympathetic to the concerns of the industry.’

- John Greenagel,

Semiconductor Industry Association






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Markets seemed to agree today, as the technology-dominated Nasdaq Composite Index jumped 33 points to close at 2,116, rising in line with broader indexes such as the Standard & Poor’s 500 Index, which climbed 20 points to 1,199. Shares of bellwether companies such as Microsoft, Cisco Systems, Apple Computer, and Yahoo all closed the day on up arrows.



“There are a couple of things the market liked about him,” said technology investing expert Peter Cohan, author of e-Stocks: Finding the Hidden Blue Chips Among the Internet Impostors. “He seems to be pretty much a Greenspan disciple and he is not going to rock the boat. He is focused on inflation.”



Semiconductor companies are likely to view the nomination in a positive light as well, said John Greenagel, a spokesman for the Semiconductor Industry Association in San Jose, California. “We know he’s sympathetic to the concerns of the industry and he recognizes the importance of a healthy and competitive semiconductor industry,” he said.



Still, Mr. Cohan did worry that Mr. Bernanke may have spent too much time in academia and government to understand financial markets well. “He might not have a real feel for how the markets work and information flows,” said Mr. Cohan, president of management consulting firm Peter S. Cohan and Associates in Marlborough, Massachusetts.



One of Mr. Bernanke’s top jobs will involve getting the ballooning U.S. deficit under control, he added. That’s because the large deficit can spark fears of inflation, making tech companies wary of investing in costly new facilities or research. “How can you be talking about investing in new processes and facilities if you can’t afford to keep the heat on?” asked Mr. Cohan.



Nearly three decades separate Mr. Bernanke, who is 51, from the current Fed Chairman, who will retire in January at age 79. Being younger may give Mr. Bernanke a better read on the technology industry than Mr. Greenspan had, suggested Mr. Straszheim. “He’s probably not a techie, but he’s got to be a user of the technologies and he’s got to appreciate the key role technology plays in the economy and the markets,” he said.





 

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