Business Times - 11 Aug 2009
(KUALA LUMPUR) Ben S Bernanke deserves another term as US Federal Reserve chairman based on his success in battling the financial crisis, said Princeton University economist Paul Krugman, a winner of the Nobel Prize.
'He's earned the right to a second term,' Prof Krugman, 56, said yesterday in an interview in Kuala Lumpur. 'He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.'
Debate over the fate of Mr Bernanke, 55, is intensifying as he nears the end of his four-year term as chairman on Jan 31. While Prof Krugman and economist Nouriel Roubini have voiced support for the former Princeton economist, others including Anna Schwartz have said that a lack of transparency exacerbated the financial crisis.
'I think Bernanke has done a really good job,' Prof Krugman said. 'He failed to see this coming and he was behind the curve in early phases. But he's been really very good in the sense that it's really very hard to see how anyone could have done more to stem this crisis.'
As his terms draws to a close, Mr Bernanke has written in the Wall Street Journal and appeared on television to defend the unprecedented actions he took during the financial crisis.
'In a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system,' Mr Bernanke said last month at a meeting in Kansas City, Missouri. 'I was not going to be the Federal Reserve chairman who presided over the second Great Depression.'
Under Mr Bernanke's stewardship, the Fed cut the benchmark lending rate to as low as zero and expanded credit to the economy by US$1.1 trillion over the past year.
Joseph Stiglitz, a Columbia University economics professor and another Nobel Prize-winning economist, said last week that he expects a 'very slow recovery' and that a replacement for Mr Bernanke should be considered.
'There are lots of potholes in the road,' Prof Stiglitz said in an interview. 'There are problems in commercial real estate. We know that there will be more foreclosures in the mortgage market' and 'we know we don't know the state of the banks.'
Prof Roubini and Dr Schwartz squared off in the New York Times last month over Mr Bernanke's fate. Prof Roubini, who predicted the credit crisis, voiced support for the central banker, while Dr Schwartz, co-author with Milton Friedman of a history of US monetary policy, wrote that the chairman should be replaced because of policy missteps and a failure to clearly articulate the bank's goals\. \-- Bloomberg
(KUALA LUMPUR) Ben S Bernanke deserves another term as US Federal Reserve chairman based on his success in battling the financial crisis, said Princeton University economist Paul Krugman, a winner of the Nobel Prize.
'He's earned the right to a second term,' Prof Krugman, 56, said yesterday in an interview in Kuala Lumpur. 'He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.'
Debate over the fate of Mr Bernanke, 55, is intensifying as he nears the end of his four-year term as chairman on Jan 31. While Prof Krugman and economist Nouriel Roubini have voiced support for the former Princeton economist, others including Anna Schwartz have said that a lack of transparency exacerbated the financial crisis.
'I think Bernanke has done a really good job,' Prof Krugman said. 'He failed to see this coming and he was behind the curve in early phases. But he's been really very good in the sense that it's really very hard to see how anyone could have done more to stem this crisis.'
As his terms draws to a close, Mr Bernanke has written in the Wall Street Journal and appeared on television to defend the unprecedented actions he took during the financial crisis.
'In a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system,' Mr Bernanke said last month at a meeting in Kansas City, Missouri. 'I was not going to be the Federal Reserve chairman who presided over the second Great Depression.'
Under Mr Bernanke's stewardship, the Fed cut the benchmark lending rate to as low as zero and expanded credit to the economy by US$1.1 trillion over the past year.
Joseph Stiglitz, a Columbia University economics professor and another Nobel Prize-winning economist, said last week that he expects a 'very slow recovery' and that a replacement for Mr Bernanke should be considered.
'There are lots of potholes in the road,' Prof Stiglitz said in an interview. 'There are problems in commercial real estate. We know that there will be more foreclosures in the mortgage market' and 'we know we don't know the state of the banks.'
Prof Roubini and Dr Schwartz squared off in the New York Times last month over Mr Bernanke's fate. Prof Roubini, who predicted the credit crisis, voiced support for the central banker, while Dr Schwartz, co-author with Milton Friedman of a history of US monetary policy, wrote that the chairman should be replaced because of policy missteps and a failure to clearly articulate the bank's goals\. \-- Bloomberg
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