Prudent Withdrawal

Published in El Pais
(Spain) on 21 June 2013
by Editorial (link to originallink to original)
Translated from by Natalie Legros. Edited by Heather Martin.
The end of the monetary stimulus shows that the U.S. foresees a solid recovery.

Federal Reserve Chairman Ben Bernanke, who as pointed out by U.S. President Barack Obama is a candidate who will soon step down, announced on Wednesday that the exceptional measures of the monetary stimulus of the economy, that which so considerably differentiates the U.S. from Europe, will be withdrawn gradually if the economy improves. By mid-2014, the rounds of quantitative easing could be history. The Fed had already given enough signs that the withdrawal was relatively close and, therefore, Bernanke made the foreseeable evolution public with extreme care and enough time. But the global markets, stocks and debt, including gold, have not been able to withstand the anxiety and have plummeted. Aided, of course, by the spread of a bad result for the Chinese Purchasing Managers Index, interpreted almost unanimously as proof that the Chinese government is about to restrict the flow of credit.

Is this concern justified or is it a nervous overreaction from the markets? Well, there is more of the latter than the former. Bernanke warned on repeated occasions that the plan to maintain federal fund rates at almost null levels and the purchase of bonds — no less than $85 billion a month — is conditioned on the economy recovering its growth path and the unemployment rate dropping below 6.5 percent. Well, the unemployment rate has been falling in an obvious manner — though without significant increases in wage income — and growth projections are satisfactory.

For the global economy, the signs of U.S. recovery should be more valuable than momentary uncertainty in the stocks and debt markets. The stock market losses and the rise of sovereign debt spreads reveal more vulnerability in some markets, such as Europe, than real uncertainty about overcoming stagnation. But in Europe, the fatal connection between peripheral countries’ public debt and [Europe]’s banking systems still has not been broken. One can analyze it in another way, one more paradoxical: Less monetary stimulus in the U.S. can put an end to penalizing Europe’s delay and clumsiness, and prolong apathy and elevated unemployment and, with them, financial instability.


El presidente de la Reserva Federal (Fed), Ben Bernanke, señalado por el presidente estadounidense Barack Obama como candidato a un pronto abandono del cargo, anunció el miércoles que las excepcionales medidas de estímulo monetario de la economía, que tanto diferencian a EE UU de Europa, irán retirándose paulatinamente a medida que la economía se recupere. A medidados de 2014 las rondas de Quantitative easing podrían ser historia. La Fed ya había emitido señales suficientes de que la retirada estaba relativamente próxima; y por eso Bernanke hizo pública la previsible evolución con sumo cuidado y tiempo suficiente. Pero los mercados mundiales, los de acciones y deuda, incluido el del oro, no han podido resistir la inquietud y se han desplomado. Ayudados, eso sí, por la difusión de un mal resultado del Índice chino de Gerentes de Compras, interpretado casi unánimemente como una prueba de que el Gobierno chino se dispone a restringir el flujo crediticio.

¿Está justificada está inquietud o se trata de una sobrerreacción nerviosa de los mercados? Pues hay más de lo segundo que de lo primero. Bernanke advirtió en repetidas ocasiones de que el plan de mantener los tipos sobre fondos federales en niveles casi nulos y la compra de bonos (nada menos que 85.000 millones de dólares mensuales) está condicionado a que la economía recupere la senda del crecimiento y a que la tasa de desempleo baje del 6,5%. Pues bien, la tasa de paro ha ido cayendo de forma notoria —aunque sin aumentos significativos de rentas salariales— y las proyecciones de crecimiento son satisfactorias.

Para la economía mundial, las señales de recuperación de EE UU deberían ser más valiosas que una incertidumbre momentánea de los mercados de acciones y deuda. Las caídas bursátiles y la subida de los spreads de deuda soberana revelan más la vulnerabilidad de algunos mercados, como los europeos, que una incertidumbre real sobre la superación de la fase de estancamiento. Pero en Europa todavía no se ha roto la fatal conexión entre la deuda pública de los países periféricos y sus sistemas bancarios. Se puede analizar de otro modo, más paradójico: menos estímulos monetarios en EE UU pueden acabar penalizando el retraso y la torpeza europea y prolongar la atonía y elevado desempleo. Y con ellos, la inestabilidad financiera.
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