Groundhog Day - Or Why Change Is Not What We Need At the Federal Reserve

It's like Groundhog Day: one major bank's stock price is falling like a stone, another banking behemoth is getting money and/or guarantees for toxic loans from the Treasury, investors are piling into super-safe Treasurys, the euro is getting pummeled against the dollar and the yen. It's Jan. 14, 2009, but it feels like any day in September or early October 2008. Or late-June 2008. Or March 2008. Or August 2007. It's clear we're stuck in the depths of the woods and there's very little light shining through the mountains of bad loans sitting on bank balance sheets to show us the way out. And that is why, amid all the many pressing issues he has to deal with, President-elect Barack Obama should announce now that he plans to re-nominate Ben Bernanke as Federal Reserve chairman when his term expires next year. There are several reasons why he should do this so far in advance:

-There's enough uncertainty in financial markets and the broader economy to keep us all awake at night for the next couple of years - the last things these markets need are jitters, rumours and chatter about who will lead the central bank as it attempts to steer us out of this mess without causing greater problems down the line. And you can bet your bottom dollar that sometime in the summer, the guessing game will start.

-Let the best man (or woman) win: Bernanke is hands down the best choice for this job. He's the foremost scholar of the Great Depression. His communication skills are impeccable and inspire trust (take a look at the speech he gave this week in London - chockablock full of information, expressed so clearly that the text could double as the basis of an introductory course on financial crises at any college).

-It's the Bernanke Fed's programs and actions that have helped pull credit markets back from the brink - just look at the impact of the mortgage bond purchase plan; it was the Fed's announcement of this plan that finally got mortgage rates to budge. They were well above 6% for a 30-year fixed rate mortgage at that point back in November, now they're just above 5%, thanks to the boldness of the program; a committment to buy $500 billion - equivalent to an entire year's worth of net new supply - within six months.

-Given the depth and intractability of the financial system's problems, come next year, the Fed will very likely still be the main counterparty and risk-taker in the credit markets. Confirming Bernanke now means stability at the helm of the markets lifeline provider - a great help in the current chaotic times. No central bank has ever attempted what the Fed is currently aiming for. There is no upside to switching drivers mid-race in this case.

Obama was elected on the wings of change. But for the sake of the U.S. economy - and with it, the global economy - he should seek not change, but continuity, at the Federal Reserve.