{"id":13404,"date":"2015-10-14T08:44:39","date_gmt":"2015-10-14T13:44:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13404"},"modified":"2015-10-14T08:44:39","modified_gmt":"2015-10-14T13:44:39","slug":"central-bankers-must-have-the-courage-to-act-before-a-crisis-don-pittis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13404","title":{"rendered":"Central bankers must have the courage to act before a crisis: Don Pittis"},"content":{"rendered":"
\n

Central bankers must have the courage to act before a crisis: Don Pittis<\/a><\/h3>\n<\/div>\n

Are our bankers-in-chief always condemned to crisis management?<\/strong><\/p>\n

Are central bankers always destined to be too late?<\/p>\n

This weekend, two of that august fraternity were strutting their stuff. Former U.S. Fed chairman Ben Bernanke\u00a0was busy promoting his new book called\u00a0The Courage to Act<\/a>.<\/em>\u00a0Meanwhile, Bank of Canada governor\u00a0Stephen Poloz\u00a0was giving\u00a0speeches\u00a0titled\u00a0Integrating Financial Stability into Monetary Policy<\/a>.<\/p>\n

And in different ways, the\u00a0two tread\u00a0the same ground: how difficult it is to rein in a housing boom before it turns into a crisis.<\/p>\n

The title of\u00a0Bernanke’s\u00a0book\u00a0has already been\u00a0pilloried for its hubris<\/a>.<\/p>\n

Voices had been raised for years that U.S. interest rates were too\u00a0low and that it was driving house prices too high, distorting the economy. But as Bernanke\u00a0admitted in an\u00a0interview\u00a0that played\u00a0Tuesday on\u00a0CBC Radio’s\u00a0The Current<\/em><\/a>, he didn’t\u00a0act until\u00a0it was far too late.<\/p>\n

Greater than housing<\/h2>\n

“It wasn’t until August of 2007 that we began to appreciate that the ramifications of the losses on sub-prime mortgages were going\u00a0to be much greater than just the housing market,” Bernanke\u00a0told\u00a0The Current h<\/em>ost Anna Maria Tremonti.<\/p>\n

Of course by that time, there was really little the U.S. central bank could do to prevent the bubble from popping, setting off a global financial meltdown\u00a0and necessitating a multibillion-dollar bailout of the banks that had contributed to the crisis.<\/p>\n

Years of low interest rates had allowed consumers to borrow recklessly. After they had access to that money, they used it to overinflate the entire economy, buying consumer goodies and bidding up the price of real estate.<\/p>\n

By then, it was too late to raise interest rates. It\u00a0could have been done several years previously, slowing the boom before it became dangerous. So why didn’t Bernanke, or his predecessor\u00a0Alan Greenspan,\u00a0act then?<\/p>\n

There may be clues from listening to our own central banker’s speech this week.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Central bankers must have the courage to act before a crisis: Don Pittis Are our bankers-in-chief always condemned to crisis management? Are central bankers always destined to be too late? This weekend, two of that august fraternity were strutting their stuff. Former U.S. Fed chairman Ben Bernanke\u00a0was busy promoting his new book called\u00a0The Courage to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[942,68,3544,3000,124,4936,1154,534,943],"class_list":["post-13404","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-canada","tag-ben-bernanke","tag-cbc","tag-cbc-news","tag-central-banks","tag-don-pittis","tag-interest-rate-policy","tag-monetary-policy","tag-stephen-poloz"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13404","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13404"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13404\/revisions"}],"predecessor-version":[{"id":13405,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13404\/revisions\/13405"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}