Dutch Central Bank Sale Announcement Imminent? Message Board

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Politics : Dutch Central Bank Sale Announcement Imminent?

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From: sea_urchin	10/25/2005 3:44:21 PM
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Stephen Roach opines and gold jumps as they welcome Ben Shalom Bernanke. forbes.com >>America has far more serious problems on its plate [than inflation] that a new Fed chairman will quickly have to confront. Two of them are especially worrisome--a monstrous current account gap and the Mother of all asset bubbles. And it turns out that the external deficit and the housing bubble are joined at the hip--thanks to the policy strategies of the man who is about to pass the baton to Bernanke--Alan Greenspan. That’s right, by condoning one asset bubble after another--first equities then property--the Greenspan Fed has encouraged American consumers to take their income-based personal saving rates into negative territory for the first time since 1933. By the way, that was not a great year for the Fed or the U.S. Moreover, with the Federal government sector’s budget deficit pushing national saving down all the more, the U.S. has had to draw freely on surplus saving elsewhere in the world to fund economic growth. And we have had to run record current-account and trade deficits to attract the foreign capital. The escape act from this conundrum--the modern-day Fed’s favorite word--has yet to be written. Bernanke has opined on the circumstances in a rather disingenuous way--suggestion that a profligate America is actually doing the world a favor by consuming a global saving glut. If that’s his starting point on the bubble-current-account conundrum, watch out below. A saving-short U.S. economy is hooked on asset bubbles and debt as the sustenance for economic growth. Weaning America from this dangerous recipe could likely be the defining challenge for the Fed and its new chairman. Like his predecessors, Ben Bernanke's skillset has not prepared him for the challenges he faces. Credentials don't make for a good Fed chairman. History tells us that it's all about learning on the job and coping with indoctrination under fire. The great irony for the Fed is that Alan’s Greenspan's legacy* may well be Ben Bernanke's albatross. << * one trillion dollars of debt creation in two years.

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