Central Banks and the IMF no Longer Able to Rescue Markets
SEPTEMBER 27TH, 2011 11:53 AM ·
They described as «Choose Greenspan», and was the cause of the feeling of a generation of traders reassured. However, have emerged in the economic storms of his era, but that Ben Bernanke was always ready to intervene to prevent a disaster. And because the trader was in front of them so, they could safely bet that the markets will survive even the worst of the crisis. In the current year, increased volatility and stock prices fell sharply, due in part to the lack of investors thought that there was what could be called the «option Bernanke» or, in this respect «Trichet option». But in recent times is not clear whether the monetary authorities in a position to prevent a new wave of panic.
In other words, the slogan of the market with the meeting of the InternationalMonetary Fund and World Bank this week in Washington may be a «sufficient foryourself, do not rely on one to save you». Thus, the situation looks significantly different than it was three years ago, when the meetings of the IMF and the World Bank as a forum to reach the common strategies to mitigate the financial crisis after the collapse «Lehman Brothers». It seems now that there is division and chaos in Europe and the United States. Has become the central banks efforts to help the economy a controversial issue in political terms, and there is a kind of internal dispute in both the European Central Bank and U.S.
Federal Reserve.
At the European Central Bank, and faced the outgoing President Jean-Claude Trichet criticized by Germany and the resignation of Jurgen Stark, a member of the German Bank Board of Executive Directors. According to Stark’s personal reasons, but viewed on a large scale of his departure is that the bank refused to buy bonds issued by European countries stalled. At the Federal Reserve Bank, Mr Ben Bernanke, Greenspan, who succeeded President, opposition within the central bank on a last ditch effort to stimulate the economy.
There was a consensus party for a long time in the United States – continued at least from 1992 when he helped Greenspan banks recover from bad loans to Latin America until 2008 – and so it was expected that the Fed’s direct boost to the economy and that is treated to a nice politicians.
The presidents tend to re-appoint the heads of the Federal Reserve, even appointed by their predecessors from the other political party, due in part to fear of the anger that the markets of any effort to politicize monetary policy. There have been six presidents since Paul Volcker took over the presidency of the Federal Reserve in 1979, but Bernanke is only the third president of the Federal Reserve.
It seems that this consensus has evaporated, with candidates competing to win the Republican nomination for the presidential elections with some of them expressing their hostility to Bernanke, although it was a Republican by the first economic adviser to President George W. Bush. He said one candidate, Mitt Romney, said that Bernanke will be asked to resign. The last, a Texas governor Rick Perry, that Bernanke may be trying to stimulate the economy to help President Obama in his quest for re-election. On Tuesday, the leaders of the Republican Party Congress an unusual step to invite the Federal Council to openly do more.
Did not prevent the Fed from some of the initiatives announced on Thursday, but it was relatively small and frustrating for investors. And stock prices fell sharply after the announcement. And may increase the political challenges of the difficulties in front of the Federal Reserve during his quest to do more over the next year, even if the economy was weaker than expected. The same image will replace the Bank of Italy Governor Mario Draghi Trichet in the first of November (November), and it will be great pressure from Germany to avoid the procedure may increase inflation, even if it were necessary to prevent the collapse of new financial order.
At the same time, European governments find it difficult to agree on effective action. Did not enter an agreement reached on July 21 (July), from which is supposed to provide funds for Greece and limit the losses banks, came into effect so far, the markets seem convinced that the Greek deficit is inevitable.
Italy is the last country to find the bond markets are reluctant to provide funds. And may require European banks, many of which were slower than their American counterparts to obtain new funding, due to fears that the saviors of 2008 – the national governments – may not be able to meet their commitments this time. After a meeting of European finance ministry last week, called on the U.S. Treasury Secretary Timothy Geithner coordination in action. He said: «Governments and central banks take risks facing catastrophic markets». After the leaves, said Austrian Finance Minister that he must stop Americans to lecture on Europe.
And feel free to countries that can borrow money easily and at low cost – most notably the United States and Germany – to do so, despite the growing threat of a recession again. He says Germans should be on other European countries to reduce costs to regain competitiveness and that there is no gain without pain. Obama proposed a new inspirational program, but this program is facing some sort of political uncertainty after a few weeks of an agreement the two parties to seek agreement on ways to reduce government expenditures.
And seized the top banks in various parts of the world into the chaos suffered by governments to start campaigns to reduce regulations, and complained that the new rules in place since 2008 threatens to set back growth. They want the rules to mitigate the capital and hope not to remember that many people accepted the risks are exaggerated, compared to capital have helped to 2008 and a disaster that threatens to create another disaster. And some politicians to join, and say that the current problems come from too much government intervention in the economy, particularly in the free markets. And perhaps find a recall of «option Greenspan» This is a strange claim, as it seems that the fear that governments may not intervene to save is to make markets in a state of anxiety.
And perhaps ambitions are few that offer the best hope for the kind of success during the meetings of the International Monetary Fund and the Central Bank. Three years ago, it was expected widely to governments and central banks can move effectively and collaboratively. Now, any indication that they still can do this look good surprise.
SEPTEMBER 27TH, 2011 11:53 AM ·
They described as «Choose Greenspan», and was the cause of the feeling of a generation of traders reassured. However, have emerged in the economic storms of his era, but that Ben Bernanke was always ready to intervene to prevent a disaster. And because the trader was in front of them so, they could safely bet that the markets will survive even the worst of the crisis. In the current year, increased volatility and stock prices fell sharply, due in part to the lack of investors thought that there was what could be called the «option Bernanke» or, in this respect «Trichet option». But in recent times is not clear whether the monetary authorities in a position to prevent a new wave of panic.
In other words, the slogan of the market with the meeting of the InternationalMonetary Fund and World Bank this week in Washington may be a «sufficient foryourself, do not rely on one to save you». Thus, the situation looks significantly different than it was three years ago, when the meetings of the IMF and the World Bank as a forum to reach the common strategies to mitigate the financial crisis after the collapse «Lehman Brothers». It seems now that there is division and chaos in Europe and the United States. Has become the central banks efforts to help the economy a controversial issue in political terms, and there is a kind of internal dispute in both the European Central Bank and U.S.
Federal Reserve.
At the European Central Bank, and faced the outgoing President Jean-Claude Trichet criticized by Germany and the resignation of Jurgen Stark, a member of the German Bank Board of Executive Directors. According to Stark’s personal reasons, but viewed on a large scale of his departure is that the bank refused to buy bonds issued by European countries stalled. At the Federal Reserve Bank, Mr Ben Bernanke, Greenspan, who succeeded President, opposition within the central bank on a last ditch effort to stimulate the economy.
There was a consensus party for a long time in the United States – continued at least from 1992 when he helped Greenspan banks recover from bad loans to Latin America until 2008 – and so it was expected that the Fed’s direct boost to the economy and that is treated to a nice politicians.
The presidents tend to re-appoint the heads of the Federal Reserve, even appointed by their predecessors from the other political party, due in part to fear of the anger that the markets of any effort to politicize monetary policy. There have been six presidents since Paul Volcker took over the presidency of the Federal Reserve in 1979, but Bernanke is only the third president of the Federal Reserve.
It seems that this consensus has evaporated, with candidates competing to win the Republican nomination for the presidential elections with some of them expressing their hostility to Bernanke, although it was a Republican by the first economic adviser to President George W. Bush. He said one candidate, Mitt Romney, said that Bernanke will be asked to resign. The last, a Texas governor Rick Perry, that Bernanke may be trying to stimulate the economy to help President Obama in his quest for re-election. On Tuesday, the leaders of the Republican Party Congress an unusual step to invite the Federal Council to openly do more.
Did not prevent the Fed from some of the initiatives announced on Thursday, but it was relatively small and frustrating for investors. And stock prices fell sharply after the announcement. And may increase the political challenges of the difficulties in front of the Federal Reserve during his quest to do more over the next year, even if the economy was weaker than expected. The same image will replace the Bank of Italy Governor Mario Draghi Trichet in the first of November (November), and it will be great pressure from Germany to avoid the procedure may increase inflation, even if it were necessary to prevent the collapse of new financial order.
At the same time, European governments find it difficult to agree on effective action. Did not enter an agreement reached on July 21 (July), from which is supposed to provide funds for Greece and limit the losses banks, came into effect so far, the markets seem convinced that the Greek deficit is inevitable.
Italy is the last country to find the bond markets are reluctant to provide funds. And may require European banks, many of which were slower than their American counterparts to obtain new funding, due to fears that the saviors of 2008 – the national governments – may not be able to meet their commitments this time. After a meeting of European finance ministry last week, called on the U.S. Treasury Secretary Timothy Geithner coordination in action. He said: «Governments and central banks take risks facing catastrophic markets». After the leaves, said Austrian Finance Minister that he must stop Americans to lecture on Europe.
And feel free to countries that can borrow money easily and at low cost – most notably the United States and Germany – to do so, despite the growing threat of a recession again. He says Germans should be on other European countries to reduce costs to regain competitiveness and that there is no gain without pain. Obama proposed a new inspirational program, but this program is facing some sort of political uncertainty after a few weeks of an agreement the two parties to seek agreement on ways to reduce government expenditures.
And seized the top banks in various parts of the world into the chaos suffered by governments to start campaigns to reduce regulations, and complained that the new rules in place since 2008 threatens to set back growth. They want the rules to mitigate the capital and hope not to remember that many people accepted the risks are exaggerated, compared to capital have helped to 2008 and a disaster that threatens to create another disaster. And some politicians to join, and say that the current problems come from too much government intervention in the economy, particularly in the free markets. And perhaps find a recall of «option Greenspan» This is a strange claim, as it seems that the fear that governments may not intervene to save is to make markets in a state of anxiety.
And perhaps ambitions are few that offer the best hope for the kind of success during the meetings of the International Monetary Fund and the Central Bank. Three years ago, it was expected widely to governments and central banks can move effectively and collaboratively. Now, any indication that they still can do this look good surprise.