Growth is good, but not good enough
"Stan Fischer saved Israel’s economy. Can he save America’s?" asks "Washington Post" blogger Dylan Matthews.
"Stan Fischer saved Israel’s economy. Can he save America’s?" asks "Washington Post" blogger Dylan Matthews. In late January, Governor of the Bank of Israel Prof. Stanley Fischer announced that he will step down in June; Matthews says that he is a plausible successor to Federal Reserve Board Chairman Ben S. Bernanke, who is expected to step down when his term ends in 2014. Matthews says that Fischer's name has begun to surface in conversations among Fed watchers, adding that Fischer is one of the world's top economists.
Matthews opens with an anecdote: "Every August, central bankers from across the globe, who collectively pull the levers of the world economy, descend on Grand Teton National Park in Wyoming. They enjoy a symposium of big economic ideas and strenuous afternoon hikes. At one of their dinners a few years ago, Federal Reserve Chairman Ben S. Bernanke looked around at some fellow titans of finance. 'Do you know what everyone at this table has in common?” he mused. “They all had Stan Fischer as their thesis adviser.'"
Matthews says that any one of Fischer's previous positions could be considered a career pinnacle: professor of economics at MIT, arguably the best economics department in the world, where Fischer was the thesis advisor of Bernanke, European Central Bank President Mario Draghi, former chief White House economist Greg Mankiw; no. 2 man at the IMF, where he helped contain the Asian economic crisis of 1998; Citigroup Inc. (NYSE: C) vice chairman, where he ran all work for public-sector clients at what was at the time the world’s largest bank; and, since 2005, governor of the Bank of Israel.
Matthews says, "No Western country weathered the 2008-09 financial crisis better. For only one quarter - the second of 2009 - did the Israeli economy shrink, by a puny annual rate of 0.2%. That same period, the US economy shrank by an annual rate of 4.6%. Many countries, including Britain and Germany, fared even worse. While they were languishing, by September 2009 Fischer was raising interest rates, all but declaring the recession defeated. It’s fair to say he’s been embraced by the Israelis."
Matthews says, "Fischer is in apparent good health at age 69. He has retained his American citizenship and deep ties to the United States. He was a candidate to lead the Federal Reserve Bank of New York in 2003 (Timothy Geithner got the job instead), and the failure of his 2011 bid to run the IMF was attributed in many circles to his being “too American” for a job traditionally reserved for a European.
"His former advisee Bernanke will end his term as Fed chair in January 2014. Could the teacher follow the student? Could Fischer move from Jerusalem to Washington? It’s not as crazy as it may sound; the market for top central bankers is increasingly global, most vividly illustrated by the November selection of Bank of Canada governor Mark Carney to lead the Bank of England. In this post-crisis era, the job of a central banker requires someone who is simultaneously a brilliant economist, regulator, diplomat and politician. Among Fed watchers, there is quiet, off-the-record talk that that person might be Fischer.
"America is Fischer’s adopted homeland: He was born in Mazabuka, a medium-size town in Northern Rhodesia, now Zambia. At 13 he moved to Southern Rhodesia (now Zimbabwe), where he stayed until heading to the London School of Economics.
According to Matthews, "The argument for him might go like this: Fischer has extensive experience managing international crises and negotiating deals between governments from his time at the IMF, and he spent three years doing high-profile work for a major bank. He is famously genial, a key skill in leading the Federal Open Markets Committee from month to month."
Matthews also points to President Barack Obama's "frosty relationship" with Prime Minister Benjamin Netanyahu, and that Fischer's time in Israel could be a favorable factor for an unprecedented appointment someone from abroad to one of the most important government jobs in the US. "How better to rebuke critics who claim that Obama is insufficiently supportive of Israel, than by picking an economist whom Netanyahu knows and respects, to the most important US economic policy job?" He also notes that Fischer’s broadly Keynesian approach being a good fit with the administration’s is just gravy. =
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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