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Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker
     

Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker

by Johan Van Overtveldt
 

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This is a ground-breaking look at Federal Reserve chair Ben Bernanke, the man steering the U.S. economy through the greatest financial crisis since the Great Depression—and the ways in which the challenges facing Bernanke were created, in large part, by his predecessor, Alan Greenspan.

Overview

This is a ground-breaking look at Federal Reserve chair Ben Bernanke, the man steering the U.S. economy through the greatest financial crisis since the Great Depression—and the ways in which the challenges facing Bernanke were created, in large part, by his predecessor, Alan Greenspan.

Editorial Reviews

Publishers Weekly
Though a phrase like "the drama of the central banker" might once have drawn snickers, today the chairman of the Federal Reserve has become something of a star. This contemporary history, from the 1970s chairmanship of Paul Volcker on, provides an excellent introduction to the current financial crisis. Easy credit in the early-mid 2000s catalyzed the subprime mortgage debacle, but Dutch author and economist Van Overtveldt (The Chicago School) defends the Fed throughout, arguing that low interest rates kept Japanese-style deflation at bay. It's early for predictions, but Van Overtveldt portrays Bernanke as the man for the season: an academic focused on the Great Depression, Bernanke became a member of the Fed's Board of Governors in 2002. Though conventional, Bernanke's present approach-further cutting the federal funds rate to spur liquidity, keeping his hands off interest rates-and belief in regulation, set him apart from Greenspan, while his commitment to transparency and clear communication align him with the new administration. Anyone who wants to understand the role of the Fed in the current crisis will find this an accessible primer.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Library Journal

In this study of the Alan Greenspan and Ben Bernanke Federal Reserve eras, Overtveldt (director, VKW Metena, Belgium) provides insight into the current financial crisis. He says that Greenspan was generally successful in keeping the economy vibrant and ameliorating financial shocks but that his use of low interest rates and his opposition to financial regulation fostered the growth of the housing and credit bubble. In 2007 the bubble burst, becoming first a liquidity and then a solvency crisis that could lead not simply to a severe recession but to a depression. Overtveldt examines Bernanke's life and economic thinking, especially on the Great Depression, to show he was equipped for this crisis. Though he admits that it is too early to predict success, he praises Bernanke's early recognition of the crisis, his interest-rate cuts, the innovative ways he injected liquidity into the system, and his push for greater transparency and regulation. Overtveldt's serious examination of how we got into this mess and what the Federal Reserve can do to get us out brings clarity to this period of financial chaos. Highly recommended for all interested readers, many of whom will have liked Mark Zandi's Financial Shock.
—Lawrence Maxted

Kirkus Reviews
Should we feel better that the chairman of the Federal Reserve is an authority on the Great Depression?Perhaps so, suggests Belgium-based economist Van Overtveldt (The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionized Economics and Business, 2007)-if only because Ben Bernanke is more sensitive to market movements and trends and more forthright in his assessments of them than his predecessor, Alan Greenspan, whose gnomic public utterances were "usually vague and restrained." The central bank that both headed is, at least as ideally conceived, responsible for helping maintain the overall health of financial conditions that drive the economy. Yet the power of the Fed has grown, perhaps unintentionally, and it has become less accountable, more secretive and obscure, and perhaps less effective. Van Overtveldt examines this evolution in light of the current financial crisis, noting provocatively that whereas Greenspan was once viewed as something of an economic magician and an exemplary manager of money, "recently . . . there has been a considerable re-evaluation of some of his decisions." As a regulator, the author writes, Greenspan was mediocre. But previous efforts to regulate diligently, guided by Keynesian views that neglected the supply side, were none too successful either, impeded by the politics of self-interest and greed. Van Overtveldt's enumeration of the succession of crises that Greenspan oversaw will make the reader wonder why anyone ever held him in esteem; this account also does much to explain the actions that Bernanke has been taking of late. The author's analysis of savings rates, deficits, monetary contraction and other matters, backedby ample graphs and plenty of hard data, is not for the numerically faint of heart, but it is accessible. Van Overtveldt is particularly clear when he examines pronouncements on the part of both Bernanke and Greenspan that he considers "spectacularly wrong."A timely study that will help readers interpret the headlines, though it offers little comfort to those hoping for a quick solution to the present mess.
From the Publisher
"Here at last is a book about the US Federal Reserve that is neither impossibly technical nor populist. The author is obviously extremely familiar with the American financial and political scene.... Van Overtveldt steers a healthy middle course." — Samuel Brittan, Financial Times

"An excellent introduction to the current financial crisis....Anyone who wants to understand the role of the Fed in the current crisis will find this an accessible primer.” — Publishers Weekly

"A timely study that will help readers interpret the headlines." — Kirkus Reviews

Product Details

ISBN-13:
9781932841510
Publisher:
Agate
Publication date:
04/13/2010
Edition description:
First Trade Paper Edition
Pages:
300
Product dimensions:
6.00(w) x 8.90(h) x 0.80(d)

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