Ben Bernanke's European blind spot

Rob Wilson / Shutterstock.com

Last week's press conference was not among Mr. Bernanke's finer moments in his eight-year chairmanship of the Federal Reserve. For aside from making the egregious blunder of providing a more specific time frame as to when the Fed's quantitative easing program might be ended, Mr. Bernanke appeared to seriously underestimate the very real external risks to the US economic recovery. In providing a relative rosy forecast for the US economy, no mention was made to either the economic slowdown presently underway in China or to the risk of a renewed intensification of the European economic crisis.

Mr. Bernanke's glossing over the threat to the US economic recovery from Europe is all the more surprising given the considerable importance of Europe in the global economy and the many red flags that are now surfacing in Europe about the prospect of renewed trouble for the European economy. Had he been paying attention, Mr. Bernanke might have noticed that the European economy is sinking ever deeper into economic recession. Mr. Bernanke also might have noticed that the Greek government is now teetering, that Silvio Berlusconi is insisting that the Italian government should take a tougher stance against Brussels' imposed budget austerity, and that the Cypriot president himself is acknowledging that the Cypriot economy is imploding.

Of all people, Mr. Bernanke should also have been painfully aware that there is very little that the European Central Bank can do to keep the European crisis from deepening ahead of the German elections in September, particularly since countries like Italy and Spain are now showing acute signs of austerity fatigue. And this awareness should have made Mr. Bernanke less confident in his relatively rosy scenario for the US economy in the year ahead particularly since the only thing that has held Europe together over the past year has been the ECB's pledge to do whatever it took to save the Euro. 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Desmond
Lachman

What's new on AEI

Making Ryan's tax plan smarter
image The teacher evaluation confronts the future
image How to reform the US immigration system
image Inversion hysteria
AEI on Facebook
Events Calendar
  • 25
    MON
  • 26
    TUE
  • 27
    WED
  • 28
    THU
  • 29
    FRI
Wednesday, August 27, 2014 | 3:00 p.m. – 4:15 p.m.
Teacher quality 2.0: Toward a new era in education reform

Please join AEI for a conversation among several contributors to the new volume “Teacher Quality 2.0: Toward a New Era in Education Reform” (Harvard Education Press, 2014), edited by Frederick M. Hess and Michael Q. McShane. Panelists will discuss the intersection of teacher-quality policy and innovation, exploring roadblocks and possibilities.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.