Fed Chief: US Incompetent in all matters; NYTimes summary
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Subject: Fed Chief: US Incompetent in all matters; NYTimes summary
Date: Friday, August 25, 2006 14:15:44 [View Source]
Huntin' Leprechauns.
Fed Chief Sees Faster Pace for Globalization
By EDMUND L. ANDREWS
Published: August 25, 2006
JACKSON HOLE, Wyo., Aug. 25 - Ben S. Bernanke,
chairman of the Federal Reserve, said today that the
pace of globalization is faster and more sweeping now
than at any other time in world history.
Text: The Speech
While he generally lauded the expansion of global
trade and finance, he warned that governments need to
help people cope with the disruptions of new
competition and "ensure that the benefits of global
economic integration are sufficiently shared."
Delivering the keynote speech at the Fed's elite
annual retreat here in the Grand Tetons, Mr. Bernanke
stayed away from the battles at the top of the Fed's
agenda - rising inflation, soaring energy prices, a
slowing housing market and worries about a possible
recession.
Instead, he focused on how today's wave of rising
global integration is forcing the Fed and other
central banks to change the way they think about
monetary policy.
*** "The emergence of China, India and the former
communist-bloc countries implies that the greater part
of the earth's population is now engaged, at least
potentially, in the global economy," Mr. Bernanke
said. "There are no historical antecedents for this
development." *** [Translation: We f'd up in Iraq
and lost the gamble for control of the oil.]
Speaking like the Princeton professor he once was, the
Fed chairman surveyed previous expansions of global
activity in history, from the Roman Empire to the
opening of the Suez Canal and European colonization.
*** Those expansions shared many themes in common with
what is happening today, he said, citing the role of
new technologies in opening trade opportunities as
well as the social and political resistance from those
whose lives were disrupted by new competition. ***
[Translation: Other countries know we're out to
defraud them out of their raw materials, by hook or by
crook, and they're not putting up with it.]
Mr. Bernanke said the process today was faster,
broader and deeper than earlier waves of
globalization. And though he did not touch on the
practical implications for monetary policy and central
banking in his own remarks, other experts here are
presenting papers that scrutinize major changes in
global capital movements between rich and poor
countries. [Translation: It only took 5 short years,
since the start of Bush '01]
One of the most startling changes, which has helped
fuel American growth and keep interest rates low, is
that the United States and other wealthy
industrialized countries are attracting huge volumes
of capital from poorer counties in Asia, Latin America
and the Middle East.
*** "Today, the world's largest economy, that of the
United States, runs a current-account deficit,
financed to a substantial extend by capital exports
from emerging-market nations," Mr. Bernanke noted. ***
[Translation: We owe Chinese slave laborers our
souls.]
Mr. Bernanke has previously argued that the United
States' huge indebtedness is merely the flip side of a
"global savings glut," caused by a shortage of
investment opportunities in other countries.
[Translation: We spent all our savings on the cheap
Chinese STUFF at Walmart.]
Other analysts take a much darker view. Kenneth
Rogoff, an economist at Harvard University, warned in
a paper here that the United States is becoming
dependent on developing countries' excess savings -
capital that they may soon start to use for themselves
instead.
"Even if these favorable trends continue, there are
massive budget problems that most of the developed
world is going to face as its populations age," Mr.
Rogoff cautioned. The Fed and other central banks, he
said, need to prepare for the "risk of an eventual
slowing down or reversal" of the flow of savings.
[Translation: The crash will be as bad as 1929, but
we will have no potential to recover.]
Mr. Bernanke steered clear of that issue. But he was
blunt in declaring that though the broad trend toward
globalization is thousands of years old, the world is
transforming itself faster now than ever before.
"The scale and pace of the current episode is
unprecedented," he said. The changes wrought by
Columbus's voyage to North America were hugely
important, he noted, but they took centuries to occur.
By contrast, he said, the emergence of China as an
export powerhouse has altered the world in less than
30 years. [Translation: Let's look at the bright
side- our future is behind us.]
The patterns of global trade and finance have changed
as well, he said. The old distinction between rich
"core" countries that exported manufactured goods and
poorer "periphery" countries that exported natural
resources has broken down. Production is becoming more
geographically fragmented, he said, citing chipmakers
like Advanced Micro Devices that manufacture
components in Texas and Germany and perform final
processing in Thailand, Singapore, Malaysia and China.
[Translation: The Colonies rebelled and there are no
more potential colonies to exploit.]
If Mr. Bernanke had a message to political leaders, it
was that they needed to acknowledge the costs of
globalization, in terms of lost jobs, disrupted
livehoods and wrenching change and help their
constituents come to terms with them. [Translation:
You're on your own, despite BigBusiness dot guv having
sold us out. (They could be sued to recover the
damages. I have a few rather large companies in mind,
but "intelligent, courageous lawyers" is an
oxymoron.)]
"The challenge for policymakers is to ensure that the
benefits of global economic integration are
sufficiently wide-shared - for example, by helping
displaced workers get the necessary training to take
advantage of new opportunities - that a consensus for
welfare-enhancing change can be obtained," he said.
[Translation: In the fantasy land of the Federal
Reserve, the imaginary capital for this retraining
investment will come from all the Leprechauns (with
their pots of gold) that we capture.]
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