Former Federal Reserve Chairman Ben Bernanke said the U.S. central bank could have done more to fight the country’s financial crisis and that he struggled to find the right way to communicate with markets.”We could have done some things on the margin to mitigate somewhat the crisis,” Bernanke, 60, said on Tuesday in his first public speaking engagement since he stepped down in January after eight years heading the Fed.
“Although we have been very aggressive, I think on the monetary policy front we could have been even more aggressive.”
Bernanke said he could now speak more freely about the crisis than he could while at the Fed — “I can say whatever I want” — and in remarks to over 1,000 bankers and financial professionals in the capital of the United Arab Emirates, he made clear that he had regrets.
The United States became “overconfident”, he said of the period before the September 2008 collapse of U.S. investment bank Lehman Brothers. That triggered a crash from which parts of the world, including the U.S. economy, have not fully recovered.
“This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises,” Bernanke said.
As the Fed provided tens of billions of dollars of emergency aid to the U.S. financial system, Bernanke said he felt the central bank was in a “terrible” political situation because it could be accused of bailing out institutions unfairly.
He also said he found it hard to find the right way to communicate with investors when every word was closely scrutinized.
“That was actually very hard for me to get adjusted to that situation where your words have such effect. I came from the academic background and I was used to making hypothetical examples and … I learned I can’t do that because the markets do not understand hypotheticals.”
He concluded that he should “try to simplify the message, but not simplify too much”.
Ultimately, Bernanke said, he wished the U.S. economy could have recovered faster but “we did good in a very complicated situation and in a very complex political situation, and the result is what it is.”
Bernanke received at least $250,000 for his appearance at the financial conference staged by National Bank of Abu Dhabi, the UAE’s largest bank, according to sources familiar the matter. NBAD did not announce the fee.
Because of Abu Dhabi’s oil wealth, state-controlled NBAD prospered during the global crisis caused by Lehman’s collapse, taking market share from hard-hit U.S. and European banks.
Bernanke’s speaking fee is similar to one received by his predecessor Alan Greenspan for an Abu Dhabi speaking engagement in 2008, the sources said.
Greenspan embarked on a series of lucrative speeches after he stepped down, and Bernanke now appears to be doing the same. He is scheduled to speak at an event in South Africa on Wednesday and in Houston on Friday.
Another former heavyweight in U.S. economic policy, ex-Treasury Secretary Lawrence Summers, spoke at the Abu Dhabi event and criticized some aspects of Fed policy under Bernanke, although he acknowledged that policy needed to be expansionary.
Ultra-loose monetary policy, known as quantitative easing, has diminished returns in the economy and there is concern about the way the impact of low interest rates is being transmitted through the economy, Summers said.
Bernanke, looking relaxed in a grey suit and tie, said that after stepping down, he would write more about his experiences in the crisis to explain his side of the story. “For the future, I’m in a mode of reflection.”
In his book, The Age of Turbulence, economists and former Chairman of US Federal Reserve (1987 – 2006), Alan Greenspan asked the question, “How do we reform government and return money and power back to the American people”. This question is perhaps more valid today in Nigeria than could have been the case in the United States in 2006. Probably in response, President Obama while visiting South Africa remarked that “terrorism is more likely to succeed in countries that are not delivering for their people and where there are areas of conflict and underlying frustrations that have not been adequately dealt with”.
The question of delivery is certainly about the existence of opportunities, how citizens are able to access them and convert into income or welfare benefits. Unfortunately, in our case, there has been systematic contraction of available opportunities, access has been privatised and virtually restricted to functionaries of government and therefore capacity to earn income or enjoy any form of welfare benefit is correlated with access to government.
This has consistently been the situation perhaps since the days of military rule, from the mid-1980s. The coming of democracy in 1999 could have altered this but sadly has been very slow if not strongly enforcing situations of denial for most citizens. It could be argued that this is very subjective. With prohibitive levels of poverty, which the National Bureau of Statistics (NBS) estimate at an average of 69% and unemployment of about 24%, the question will be what is being done to ameliorate the situation.
It could be justified that it should not be the sole responsibility of government to ameliorate this unfavourably bad situation. However, to the extent that government responsibilities include public services and guaranteeing economic stability, government’s capacity to come with initiatives that create opportunities and widen access for citizens become important.
Two fundamental preconditions for this to successfully take place are leadership astuteness on the one hand and right sets of actions or programmes, on the other. In summary the competence of our leaders to be able to drive governance process to produce desired results – improved welfare and higher living conditions for citizens. Issues of knowledge and experience supposedly play central roles and in a democracy whereby citizens elect their leaders, these should have been the guide.
With largely money and other sentiments, cheaply ethnicity and religion, becoming primary, the possibility of leaders emerging without any understanding of the problems facing society and therefore incapable of initiating any action or programme is very common. In fact, the dominant perception among contemporary Nigerian leaders is that the country is endowed with all the needed resources. The major problem therefore is the share of it that gets to them, whether at the federal, state, local government or even nongovernmental organisations. This then means that preoccupation of government excludes issues of wealth creation.
On account of this, citizens are regarded as liabilities and parasites and exclusive in discussing resources of the country. This is informed by an ideological mindset that is revisionist and departs from the classical economic dictum that identified land, labour, capital and entrepreneurs as the four factors of production. In the Nigerian case, the only factor of production is land largely limited to the oil producing communities which is the one that generate virtually all the resources of government.
With the high foreign content of the oil sector, capital and entrepreneur are hardly Nigerian. This reduced Nigerian citizens and nearly all other parts outside oil producing areas as imaginary in the psyche of our leaders. To realise the much talked about government revenue, our leaders really don’t need much in Nigeria beyond the oil producing land.
In the circumstance, all the priorities of our leaders are reduced to simplified projects that hardly go beyond buildings and physical installations without necessarily paying attention to issues of human development focusing on education and healthcare services. Classrooms and schools get constructed that way without worrying about or recruiting teachers that can use the classrooms and schools to teach pupils and students. Hospitals, clinics and primary healthcare centres are built without concern for doctors, nurses and other medical staff to use the structures to attend to patients.
With this strongly perverted capitalist ideological bent influenced by wrong application of IMF/World Bank prescriptions, which emphasises deregulation of public services and increased role of private sector, the dominant approach is to surrender key functions of government to private operators. Through that, public resources get diverted to so-called private operators with zero value input. In terms of qualification, the most important factor is relationship with functionaries of government. Knowledge is immaterial. Thus, the resort to coercion is easy and almost given. Citizens’ willingness to respect the conduct of these so-called private operators is not stimulated by the services they provide but out of compulsion.
Yet, as citizens, we continue to hear statements about dividend of democracy and performance of governments. How can anyone be talking about dividend of democracy or performance when poverty has increased from an average of 54% in 1999 to 69% today? Where is the dividend or performance when the reward to citizens for living in a country that its government recorded increased revenue from N8 trn between 2002 and 2006 to N8 trn annually today is increased poverty and unemployment?
However considered the situation simply alienates citizens and translate to outright denial. Almost all the resources of society become controlled by the few functionaries of government and their hangers on. Citizens have very little influence, if any at all. It has been our national reality since the period of military rule and our democracy is yet to produce any alternative.
The hope of many Nigerians is that the birth of APC should translate into an alternative – the emergence of competent leaders with clear knowledge and good initiative. Should APC reduce the challenge of leadership to simple issues of ethno-religious factors, its capacity to respond effectively to the task of returning money (resources) and power to Nigerian people would have been weakened. The reality is that once ethno-religious factors are the most important qualifications, the loudest of those demanding for leadership will be empty and all they will be aspiring for is simply access these resources that are in the custody of government and covert them to privatised use.
Nigerians are hungry for knowledgeable leaders coming with good initiatives to produce a new beginning for the country. A new beginning that translates into government at all levels emerging as strong facilitators for economic activities with democratised access to opportunities for all citizens irrespective of religion, ethnicity or any other form of differences. The primacy of knowledge and experience should therefore replace ethno-religious consideration.
Our democracy should begin to produce a shift in the way leaders emerge in Nigeria from cheap ethno-religious to the primacy of knowledge.
The U.S. economy “is going nowhere” until a budget agreement is reached that includes debt reduction to revive sustainable growth, former Federal Reserve Chairman Alan Greenspan said.
“Unless we remove some of the deep-seated uncertainty, especially for investments in very long-lived assets,” growth will remain under 2 percent, Greenspan said during a “Bloomberg Surveillance” television interview with Sara Eisen in Washington.
Greenspan said he supports the $2.5 trillion package of spending cuts and tax increases proposed by Erskine Bowles and Alan Simpson. An update of the plan released in Washington includes $740 billion in increased revenue over the next decade that Republicans have deemed unacceptable and a higher eligibility age for Medicare that President Barack Obama has rejected.
Their plan would reduce debt as a share of GDP below 70 percent by 2023, compared with 73 percent by that year in Obama’s budget released this month and 55 percent in House Republicans’ budget.
“The most fundamental issue that can be addressed at this stage is getting the budget under control,” Greenspan said. The Simpson Bowles plan is “the only vehicle that is going to lead to a solution to bring the debt down in a permanent and credible way.”
Signs of economic strength are emerging. The Standard & Poor’s 500 Index of stocks has gained 10.6 percent this year, touching a record high on April 111.
Still, while the Fed has injected more than $2.5 trillion into the economy since 2008 to revive growth, GDP is forecast to grow 1.9 percent this year, below the 2.5 percent average the past two decades, according to the median estimate in a Bloomberg News survey of 93 economists.
Debt has dominated the partisan Washington budget debate, with federal deficits topping $1 trillion for four years before falling to a projected $845 billion in fiscal 2012 ending Sept. 30. Obama has sought a deal with congressional Republicans that would include raising revenue through taxes along with making budget cuts.
“The two sides don’t talk to each other,” Greenspan said, comparing the mood in Washington now to that during his time as chairman of the Council of Economic Advisers in the 1970s, when President Gerald Ford sparred with Speaker of the House Thomas “Tip” O’Neill Jr. “Gerry used to pound away at Tip from 9 to 5, then at 6 Tip would show up at the West Wing and have a bourbon with Gerry.”
“Unless we remove deep-seated uncertainties, the economy is not going anywhere,” Greenspan said today during a “Bloomberg Surveillance” television interview with Sara Eisen in Washington. The economy will “stay this way unless we remove a lot of the uncertainty.”
Greenspan said he supports the $2.5 trillion package of spending cuts and tax increases proposed by Erskine Bowles and Alan Simpson. An update of the plan, to be released today in Washington, includes $740 billion in increased revenue over the next decade that Republicans have deemed unacceptable and a higher eligibility age for Medicare that President Barack Obama has rejected.
“The most fundamental issue that needs to be addressed is getting the budget under control,” Greenspan said.
We may be on the brink of one of the greatest evangelistic opportunities of all time. We know from Jesus’ words that people are waiting to be gathered into the harvest of God’s kingdom—the fields are truly “white for harvest” (John 4:35). So while conditions are shaping up to produce a perfect storm of problems, believers have an unprecedented opportunity to represent the Lord of the harvest to those seeking His kingdom.
You’ve seen the headlines replete with the news, analysis and projections of economic stress in the world’s financial systems. Both liberal and conservative government officials, economists, investment bankers and politicians unanimously agree that the world’s economic system cannot continue “business as usual” without dramatic aid, assistance, reform or restructuring.
One doesn’t have to look much farther than the financial situation of world governments, including the United States, which is 100 percent in debt in ratio to its gross domestic product (GDP), approaching 50 percent of the population receiving their primary source of income from the government, and less than 50 percent of the population paying federal income tax. In addition to this, the world is running a deficit in excess of 10 percent of world GDP (the U.S. is at 14 percent of U.S. GDP).
These numbers are unsustainable. Greece has hit its debt wall. Spain and Italy are facing their own debt walls, as is France. Former British Prime Minister Tony Blair recently stated that if Europe did not change its entitlement mentality, it would not survive. (For articles explaining in plain English what a debt wall is and why we must restructure the world economic system, visit debtwall.org and search for the “Catch 22” series.)
There is no easy way out of the situation. We cannot tax our way out, spend our way out, borrow our way out, print our way out or grow our way out. We have to deal with the debt and the deficits by restructuring government programs and the services they provide. This will not happen without some pain and sacrifice. The longer we deny reality, the greater the pain and sacrifice.
So enough lamenting—you’ve heard this before. As citizens, what can we do about the situation when we seemingly have no control? Politicians are in gridlock. No one is telling the whole truth. And no one wants to call for joint sacrifice. So what do we do?
It’s time for believers to provide our own solutions and become part of the answer to the problem. The church should be seen as a light, a provider of hope and a leader in the transition to a new, stable economic system.
I would suggest taking a world Christian biblical point of view: Seek first His kingdom and His righteousness (see Matt. 6:33 and Luke 12:31).
Early Church Economy For a solid model, we can examine what the New Testament churches of the early centuries did to seek God’s kingdom first amid living in a secular world. According to Bruce Shelley, author of Church History in Plain Language, the Roman emperor Julian the Apostate “wanted to set aside Christianity and bring back the ancient faith [of pagan worship], but he saw clearly the drawing power of Christian love in practice.”
Julian is quoted as saying: “Atheism [his term for the Christian faith] has been specially advanced through the loving service rendered to strangers, and through their care for the burial of the dead. It is a scandal that there is not a single Jew [meaning Christian] who is a beggar, and that the godless Galileans care not only for their own poor but for ours as well; while those who belong to us look in vain for the help that we should render them.”
Shelley argues that one of the reasons for the spread of the church throughout the Roman Empire was the “practical expression of Christian love.” The early Christians did not rely upon the government for anything—after all, they were being persecuted by it. Yet they took care of themselves and others who needed help, and they set no qualifications or criteria for whom they helped. It was one of the most successful periods of evangelism in Christian history.
Yet another opportunity—and in many places, increased persecution—may be coming that allows us to show the love of Christ and enhance the harvest. Europe is in recession. China is not meeting its economic benchmarks of growth. The U.S. is not in a position, primarily because of its debt, to lead the world out of this recession.
Some economists predict that by October European banks will be in need of substantial relief. Depending upon the extent of the bailout required, this could in fact impact the American economy.
In the opinion of Alan Greenspan, former chairman of the Federal Reserve, Europe is the big question mark in our ability to recover. Milton Friedman, the noted economist with whom I once worked with during the Reagan administration, once said to me, “If the king in the middle ages—who controlled all land, all rent, all wages, had slaves, could print money and whose word was law—could not print and borrow his way out of trouble, what makes you think that government can do it today?”
This has happened before. It happened to Rome in the third and fourth centuries. The lack of proper response by the Roman government was a major element in the fall of the Roman Empire. Great Britain went through a government and economic restructuring in the late 19th and early 20th century at the dawn of the Industrial Revolution.
We have learned these lessons before. And we are in absolute denial to think that there is any easy way out of this situatio
Our Plan Ahead Though this global problem has happened on our clock, so can the solution. It is time to prepare for the role that each of us can play, knowing that we are facing an impending crisis.
The Titanic was called an unsinkable ship. Yet when enough compartments were breached under the water line, the chief engineer responded to the captain: “She’s made of iron, sir. I assure you she will sink.” There was not a proper plan for evacuation of the passengers. Tragically, more than 1,500 people died because of this lack of planning.
The world will face economic restructuring—it’s inevitable. It is yet to be determined how painful the process will be. More natural disasters may occur. Or there could be a terrorist attack again on our soil. Yet undoubtedly, people will be in need. And as Christians, we must be prepared to help all. Paul was clear in his admonition to the people of the church in Rome: “I am obligated both to Greeks and non-Greeks” (Rom. 1:14, NIV).
Rick Joyner of MorningStar Ministries is a national emergency preparedness trainer and certified responder. He and his teams were some of the first responders to the Hurricane Katrina disaster. His observations were that the first two weeks were chaos. People literally took the law into their own hands. The second two weeks, Marshall Law set in and the federal government and National Guard established order. The third two weeks, civic operations and charitable organizations—along with the federal and state governments—established a system for providing basic services and order was sustained.
I believe this can be an example to us for what to expect and how to respond when there is a breakdown in distribution of basic supplies and services.
Many churches are prepared to help and have done so locally. Christians have responded by providing aid to areas of fire, flood, earthquakes and other natural disasters. Many have volunteered their time and talents. In fact, in the aftermath of Hurricane Katrina, so much charitable aid came at one point that it was difficult to organize and distribute the aid packages. A better plan of organization is needed.
If a major national disaster occurred that impacted several states, a large region or the entire country, a national network plan, locally implemented, could not only be beneficial but critical.
No one knows what the transition to restructured government services will look like. It may be dramatic in its impact or it may be a slow, downward-spiraling process. But the reality of economic reconciliation is coming. Christians must be prepared to help. In doing so, the harvest will be enhanced. By sacrificing for others, sharing and providing basic needs and services, we will demonstrate Christ’s love. In showing love for others, our evangelical purpose is fulfilled.
A person’s responsibility is first to his family, then to the body of Christ, then to all fellow brothers and sisters, and last, himself. If every church in America prepared its members to take care of themselves and one other non-church member per church member for six weeks, the entire U.S. population would be covered for critical needs. I’m not suggesting that churches spend money or stock up on supplies. I am suggesting that churches have a plan to prepare for a harvest that could be at hand.
Most Americans have enough food in their cupboards to survive for a couple of weeks. We are a blessed nation in abundance. If each church had a plan simply to coordinate all the cupboards within its congregation, those in the church would be surprised at how much food they already have. And if society saw churches as islands of refuge, places to go for help and advice, then the first two weeks would not have to result in people taking the law into their own hands.
All states have emergency preparedness plans, but few states have actual statewide emergency plans. If church leaders were prepared for any crisis and informed the local sheriff or police of their willingness to help when a crisis developed, then they would be easily included in the process of creating coordinated plans. For example, I know of churches in Oklahoma and Alaska that have successfully begun this process of coordinated planning with local governments.
Where Do We Go From Here? The necessity of economic restructuring will result in one of two scenarios: either 1) more federal government control, less states’ rights and reduced individual freedom as the federal government provides basic services; or 2) state governments and local municipalities will provide basic services and the result will be more local control, increased states’ rights and a proper balance between federal and state governments. Christian aid, for the right reasons, could help tremendously in the latter result.
So again, what does it mean to seek first God’s kingdom and His righteousness? To me it means trusting God and His rules for order. It means believing He will act upon your prayers. It means loving your neighbor as yourself. It means believing that His kingdom is the answer rather than total government control. It means spreading the “Good News.”
Righteousness is doing the right thing, pursuant to God’s laws and commands, and obeying His directives. If we do this for God’s glory, we set the example for the sacrifice that is required to right the order.
Remember, Jesus told us we are not to worry or be anxious about what we eat, what we drink, what we wear—“your Father knows that you need these things” (Luke 12:30, NKJV). At the same time, just because we are not to do this in fear or worry does not mean that it would not be prudent to prepare.
In Acts 11:28 Agabus predicted famine. It actually happened. Scripture says, “The disciples, each according to his ability, determined to send relief to the brethren dwelling in Judea” (v. 29, emphasis mine).
The exercise of faith, knowing that God is in charge of all circumstances and that He will provide for us and for others through us, is our obedience to God’s Word.
In Jeremiah 22:15-16, God offers the following statement about King Josiah: “He did what was right and just, so all went well with him. He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?” (NIV).
Many churches today provide for the needs of the poor as best they can. it’s not easy, given the countless requests made. Pastors have to determine the legitimacy of the requests for help and prioritization of resources. But that’s not the point—the main issue is whether we are prepared to help at all.
A time is coming when the need will be great. Just as in the time of Agabus, when a greater need was predicted, a plan of organization and coordination was required. The early church assigned the task and organization to the elders. Possibly we could do the same today. There are elected officials who would help with the implementation of Christian services to overall government plans.
However you balance the Scriptures on providing for the needy, a believer’s obligation is to share the good news of Jesus Christ for the Kingdom. An opportunity is coming for a great harvest and awakening, and we must be ready.
In these times, will we as Christians be known as a movement of servants who gave hope and comfort in time of need? Will historians, centuries from now, refer to Christians as having provided a solution to a world of peoples’ needs?
May we prepare to set the example of love, be obedient to our call and seize the coming opportunity for the harvest.
Source: CHARISMA NEWS.
Marc Nuttleis an attorney based in Norman, Okla., who represents corporations, business projects and political entities nationally and internationally. He is widely recognized for his expertise in forecasting political and economic trends and served on the Industrial Policy Advisory Committee for Trade and Policy Matters for the U.S. government under President Ronald Reagan.
On Wednesday, the European Central Bank declared it stands “ready to act” and the market surged, with the Dow having the biggest rally of the year rising 287 points. On Thursday, Fed Chairman Ben Bernanke testified the Fed “remains prepared to take action as needed to” and some wind came out of the market’s sails.
After trading as high as 12,555 early on, the Dow (^DJI) was recently up 0.78% to 12,511 while gold was down 2.6%.
Some of the disappointment in Bernanke’s testimony before the Joint Economic Committee of Congress was, quite frankly, a sign of traders’ greed and eagerness for a “green light” from the Fed. As Europe’s crisis has escalated in recent weeks, featuring fears of a bank run in Spain, many traders have been betting on another bailout from the world’s central bankers.
Dovish comments Wednesday from a trio of Fed officials — including vice chair Janet Yellen — further raised expectations for Bernanke’s testimony, as did an overnight rate cut from China’s central bank.
Gerald O’Driscoll, former vice president of the Dallas Federal Reserve and a senior fellow at the Cato Institute, says anyone disappointed in Bernanke’s testimony has misread the tealeaves.
The Fed chairman may be trying to build consensus for additional action “but I doubt he has consensus [now] to do something new,” O’Driscoll says.
More importantly, perhaps, O’Driscoll notes Cleveland Fed President Sandra Pianalto — who is a voting FOMC member this year — recently told The WSJ she hasn’t changed her view that the Fed should stand pat.
This may seem like inside baseball but Bernanke is much more of a consensus-builder than his predecessor, Alan Greenspan, so is not going to run policy by decree.
Given all this, O’Driscoll believes the most likely path for monetary policy is an extension of ‘Operation Twist,’ which is currently set to expire on June 30, rather than a new round of asset purchases, a.k.a. QE3.
That said, O’Driscoll stands by his prior stance that the Fed is “running out of tools” to have a major impact on the economy.
“I think the things that beset the global economy, especially outside the U.S. are not easily addressed by monetary policy,” he says. “It’s not clear…anything the Fed does at this point will have a substantial impact.”
Even Bernanke, who says “the Fed still has the tools to keep the economy moving,” admitted Thursday the efficacy of monetary policy is lower today than it was in 2009. But that won’t stop speculators from wishing for more from the Fed.