Wednesday, November 10, 2010

Bernanke reason not be happy

 Bernanke's second term and (Ben Bernanke) re-elected chairman of the Fed, which began its second four-year term. Although Republican officials Bernanke was born in this technology-based re-election, is not necessarily showing Obama in the Democratic camp troops ended their mind on the broad but Bernanke team at home and abroad in the Great Depression, they confirmed the issue on solid research foundation and the original home and abroad for his ability to withstand the way, only to finally get rid of the U.S. economy today, basis. Obama, of course do not want to re-enable this critical moment in the new market confusion caused.
Bernanke :
First, clear your diagnosis made public, a change in honor of the former Federal Reserve Chairman Alan Greenspan Ruleiguaner are good at running its companies to take strong measures such as stripping the practice of toxic assets, or when the current results appear gradually, people began to slowly come to realize out of this one of the The Japanese government also realized the shortage of liquidity after the crisis of national financial systems of the enormous impact, so use a large number of national financial resources to those at risk of banks to inject liquidity, however, for enterprises, as taking into account The next bailout may bring the phenomenon of debt financing hard to give up), while the bank due to shrinking further damage, resulting in acts of the Government's rescue because South team today fully aware of this .
Second, the emphasis on team and nature of the incident response capability is slightly slower, but together, moving steadily, every step of the decision-making style of American society from top to bottom has been accepted and overseas colleagues and praised, in particular, the team has shown real Bernanke, respect science mode of operation of monetary policy in today's the best time and after the bubble had been suspected and accused.
third, dealing with the liquidity crisis, monetary policy can not be rigidly locked in the pre-crisis pegged the inflation objective. Bernanke team aware of current crisis has brought to the market price of serious damage to the role of the wealth effect caused people to shrink and the debt burden of the increase, but also led to the creation of profitable enterprise for the production of pessimism and negative consequences of the loss of enthusiasm. pegged to inflation, although economic stability, even during overheating of the market is conducive to the formation of common expectations, monetary policy, lower costs and thus play a positive role. However, in times of crisis of liquidity, if the Government still adhere to the practice of pegging the inflation target, it will be based on the Government to the liquidity of the market has been put on the scale of the formation to determine the extent of inflation, so most likely functional in the absence of fixed market prices, corporations and financial institutions did not improve the balance sheets of the pattern, people started to worry about the limits of monetary policy has come , the behavior of liquidity injections will stop, so, more insolvent enterprises will not be willing to invest, continue to sell through their core assets to improve its liquidity, results of market prices become worse and worse, corporate earnings ability to become weaker, repeating the mistakes of the Japanese rescue invalid. had loose monetary policy will bring about the effect of price fix (repair the crisis period, the formation of prices does not mean inflation), however, people turned to pessimism on monetary policy expected to make the degree of deflation has become more and more serious! Anyway, today we see the United States no longer intends to sell his General Motors Opel brand's core assets to maintain their mobility practices, once again permit Mingbonanke investment liquidity to the market approach produced positive results. If the team had the market that Bernanke is more concerned about inflation, then there can be no change in today's general development strategy. In fact, Bernanke praised the United States itself has been pegged to inflation representatives targets, but this time he see the liquidity crisis caused by the huge impact on the economy is not inflation but deflation! Japanese case is the firm an important basis for his belief.
, of course, Bernanke is currently His success does not mean that style and mode of operation of monetary policy in the future to get rid of the following challenges:
First, the new model of economic growth can not be established as soon as possible, then, the U.S. monetary policy at this stage of the restoration of the balance sheet because the real economy will not lead to increased profits and wealth of space and deterioration, therefore, loose monetary policy may lead to capital markets and commodity markets price bubble continues to expand, this is not accompanied by economic growth ; phenomenon Bernanke, the current monetary policy will sadly fail, may also be because of the huge flow of aptitude in other countries caused by the world's output and economic stability, economic recovery more difficult.
Second, the economic and financial globalization environment, the supreme interests of the United States will affect the current monetary policy support the huge U.S. twin deficits of the overseas The exodus of the U.S. market, or of foreign exchange assets of major U.S. creditor a substantial reconfiguration of the great shift, then the weak dollar would subvert the authority of U.S. monetary policy and the dollar-dominated international monetary system, which will speed up the formation of U.S. inflation . Therefore, in this sense, the current method of operation of such a policy of the conflict between the decision-making team will reduce their confidence in monetary policy made the United States has recently shown good with even the best theoretical foundation of economic fluctuations, also because they have been but still bear the blame turbulence was considered by the authority of the Federal Reserve Chairman Ben Bernanke is not a small one to bear.
So, I think the Federal Reserve Chairman Ben Bernanke on the successful re-election will not Qingshu breath, but feel the responsibility become more and more. For China, we also benefit from the recent monetary policy Bernanke reference to some ideas will help improve the effectiveness of central bank monetary policy and the profound insights valuable experience.

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