From the Fed Chairman, Red Flags and Brown Socks

"Wall St Rebounds as Bernanke Calms Nerves"

The requisite calming accomplished, Bernanke relaxed, stretching out his legs under the witness table.

Showmanship is not something that comes naturally to the white-bearded academic. He testified yesterday with a large band-aid on the tip of his index finger, and his suit jacket was bunched up around his neck like a life vest, causing one sleeve to hike up on his forearm. Though his suit was gray and his shoes were black, his socks were brown (President Bush once ridiculed him for wearing tan hosiery).

Bernanke had come not to prop up markets but to scold lawmakers about the need to do head off the coming fiscal crisis. Lawmakers, however, reacted like addicts, either denying their problem or promising to give up the spending habit another day.

"I beg to disagree," said Rep. Marcy Kaptur (D-Ohio). While Bernanke may believe "we've got too many people getting older," Kaptur informed him that "what's happening is that capital investors have figured out how to make egregious profit by outsourcing."

Rep. Lloyd Doggett (D-Tex.), likewise, quarreled with the view that "all we need to be concerned about is that Grandma's Social Security check is too big."

Rep. Rodney Alexander (R-La.) identified the problem: Medicare's electric wheelchairs. "Going back a long way, I think 1965," he said, "I could have bought absolutely the best car on the lot for $4,000. And today we have a system that's spending that much or more for medical devices, motorized wheelchairs or whatever."

Other lawmakers struggled to wrap their arms around the crisis Bernanke was describing. "We're just, kind of, whistling past the graveyard?" asked Rep. Marion Berry (D-Ark).

"Yes, sir," said the chairman.

"And hoping that the tooth fairy comes and bails us out of this deal?"

"I don't know about the metaphors there, Mr. Congressman," Bernanke replied.

Rep. Jeb Hensarling (R-Tex.) had a different metaphor to run by the chairman. He asked if "we are debating how to mop up six inches of water in the stateroom of the captain of the Titanic when we should be focused upon the gaping hole in the hull of the ship."

"The heart of the problem are the entitlement programs," Bernanke affirmed.

Rep. Darlene Hooley (D-Ore.) had an idea. "If you were in a class of fifthgraders, how would you explain to them the consequences of our national debt and deficit?" she asked.

"I would say that our economy needs machines and new factories and new buildings and so on in order for us to have a strong and growing economy," he answered patiently. "If the government doesn't cover all its expenses, it has to take out the money that would otherwise be used to build those."

Bernanke reflected. "That probably wouldn't work for a fifth-grader," he said. Nor, apparently, for members of Congress.