February 23, 2010
This is a pretty tricky time to work for a Central Bank, don’t you think? You spend years in the background, the national and international economy chugs along, and people forget you exist.
Perhaps once a month, when it is time to set interest rates, people remember faintly who you are and what you do. But things are so good that don’t even need to change interest rates for months at a time.
Life is good.
Then things go wrong. Your knowledge needs to be used to fix an economy. You need to prevent a recession. There aren’t many of you and yet you are there to hold back the tide of the global economy. Suddenly, you have the weight of the world on your shoulders and your ideas need to work. They were only theoretical before…
Now you need to try and explain words like ‘Quantitative easing’ to a sceptical public. Uh-oh. Trying to tell the world that fixing an economy with too much borrowed money by borrowing a much larger amount can’t be easy. It is like a pilot telling air passengers that this turbulence is normal. You hope, you want to believe, but you are still scared by it.
That Greenspan fella had it right. Get to the top. Stay there. Watch the bull market run and run. The world loves you. Then, see the problems coming on the horizon and retire quick!
Jumping in to rescue a bank is one thing, but a country? And the stakes are high! This isn’t about saving Greece. I doubt there are many European Finance Ministers that give a fig about the Greek economy. Their main interest will be in a nice summer holiday in Crete, not salvaging a nation. They have their own problems to ponder upon. No, instead, they are worried about the potential for the euro to become unstitched and the impact that will have on their own position.
Then there is Portugal, Ireland and Spain. Then Britain! Fixing this little lot won’t be easy. Can we all rely on the German economy? We don’t need a Central Banker, we need Superman!
Will the euro survive this? Or will other weak economies (the UK?) be forced to join for safety in numbers?financialguy