I thought I’d draw your attention to the full page Financial Times article about three wiser men: Bernanke, Trichet and King. Article concludes that:
“If the central bankers reach an agreement on how to move forward on these issues, they could gain a better arsenal of policy tools to use next time a crisis strikes. Better still, if such tools are already in place, they could be pulled out with less drama – and thus trigger less panic. But as ever in central banking, policymaking remains a balancing act. Do too little or only act in the most grave circumstances and you threaten to increase the stigma associated with your operations, so they are ineffective. Do too much and you run the risk that bankers will take advantage and so you generate more crises by your actions. No one said central banking was easy. And none of the central bankers gathering in Tokyo last weekend was willing to bet that their current test is yet finished.”
I am still digesting this article, I will write my comments this evening. One quick reaction is that global problems require global response (global talking is not enough, it just adds to global warming), and second is that we may be applying wrong medicine. Recall IMF-run multilateral consultations process and its main conclusions. Now look at the implemented actions. Will deeds and words ever get more inconsistent than nowadays? More on this later today.