Amidst doubts and internal disputes. All came out in JH:
JACKSON HOLE, Wyo.—After four years of fighting crises and pumping money into the financial system, the world’s central bankers are concluding that the global economy is still in a precarious position and the policy apparatus is ill-equipped to help.
The mood here in the Grand Tetons, where central bankers and private economists from around the world gather each August, was distinctly gloomy.
The angst was underscored in a blunt speech by the International Monetary Fund’s new managing director, Christine Lagarde. “We risk seeing the fragile recovery derailed,” she said Saturday. Those risks have been aggravated, she said, by the public’s sense that policy makers’ response has been inadequate. “We are in a dangerous new phase,” the former French finance minister said.
What Ms. Lagarde said publicly, several central bankers expressed privately. The central bankers’ problems are compounded by internal divisions and current realities. Several U.S. Federal Reserve officials have doubts about how much more they can do to resuscitate a U.S. recovery that is falling short of Fed expectations.
And if you misdiagnose the “cause” of the crisis…:
Some economists, among them Harvard University’s Kenneth Rogoff, say today’s painfully slow economic growth is the inevitable result of the massive head winds that follow a recession caused by a banking and financial crisis. Government policies, given already heavy burdens of debt on governments in the U.S., Europe and Japan, can’t overcome the relentless efforts of households and banks to reduce their debt loads.
You “give up”?
“Unfortunately,” economists at IHS Global Insight said this weekend, “the Fed doesn’t have any rabbits to pull out of the hat to magically re-ignite economic growth. It is doing what it can (and that will probably mean more quantitative easing at some point), but its prime ammunition has already been used.”