Zhao Yan: Obama and Bush Sr. in the Same Boat

Published in Sohu
(China) on 4 November 2010
by Zhao Yan (link to originallink to original)
Translated from by Peixin Lin. Edited by Gillian Palmer.
The economy is cyclical, but voters are impatient.

As the economic recovery after the subprime crisis has been slow, Obama is saddled with “charges.” In the face of America’s complementary and closely connected monetary and fiscal policies structure and an independent Federal Reserve, Obamahas no choice as president but to produce a promising scorecard for the mid-term elections.

As of the publication time, election and opinion polls show that the Democratic Party has lost all hope. Obama is about to face a Republican-led House and Senate.

All politicians look forward to applause and cheers and desire rapid political achievements just like doctors look forward to patients quickly recovering. U.S. monetary policy administration is completely independent and perhaps this is to curb professional politicians’ “impulse towards quick achievements.”

If Bernanke’s control over monetary policies would loosen a little, I believe that there would be greater recovery and growth, and the first black president would have better days. Even though the sub-prime crisis has caused global deleveraging, and demand has become the crux of economic growth, stimulating demand is not necessarily the only “treatment” — we can also increase liquidity.

Whether the sub-prime crisis or the cyclic economic problems of the past, the flu analogy is apt. Other than immunization, then re-balancing and steady improvement, treatment can also take the form of going straight for a jab of the strongest antibiotics. Two kinds of treatments, with which the sick similarly recover, are discharged and go home. After the illness, is the immune system stronger or has drug resistance increased? You can consider that the next time you get hospitalized, but it remains your problem.

This is reminiscent of the brief economic slump 20 years ago between summer 1990 and 1991. Then-president Bush very much would have loved to see Greenspan relax U.S. monetary policy and yet had no authority to order Greenspan to do so. Bush ultimately lost re-election and has taken to heart Greenspan’s tightening of monetary control.

A famous slogan from the 1992 presidential elections, “It’s the economy, stupid,” has now resurfaced to be used against Obama during the mid-term elections, satirizing Obama’s lack of economic governance. But Bush and Obama are in the same boat, and I am afraid that is precisely the subtle profoundness of U.S. monetary policy.

Established in 1913, the mission of the Federal Reserve has always remained to control the technicalities of U.S. monetary policy. This means that the massive locomotive that is the U.S. economy is to be driven by two cooperative drivers — the president and the Federal Reserve chair.

The central bank is controlled by technocrats, and is characteristically more inclined towards technical maintenance of stability and is more likely to consider the economy from a technical standpoint. It has no responsibility, in success or in failure, toward the president.

I have discussed many times before that after the sub-prime crisis, while both China and the U.S. similarly adopted a policy called quantitative easing, the biggest difference is that China’s “easing” is the easing of bank credit, but in the U.S. it is the Federal Reserve’s “easing” towards banks, and at the same time tightening banks’ interactions with the markets. This has led to a substantial increase in capital adequacy ratio, federal funding for banks to pay interests on excess reserves and restriction on the proliferation of bank credit. To be accurate, the Federal Reserve claims that it cannot allow the banks to lend; in actuality, the policy has inhibited the indiscriminate lending prior to complete economic management such that the U.S. continues to face a liquidity squeeze.

In this environment of low interest rates but low liquidity, the U.S. has successfully restored the banks’ scorecards, in the midst of restoring real estate and employment. While the speed of recovery does not match up to the public’s levels of anxiety, it appears to be slow and steady. Till now, the U.S. enjoys low interest rates and yet does not have to pay the price of inflation. It is inevitable that SMEs will become victims under such monetary policy.

With fiscal policy under his control, Obama directly points to the current monetary policy as the weakest link. While the 16 consecutive tax reliefs for SMEs have yet to receive applause, if it is sustained in the long run, it will work out sooner or later. Currently, it is easily observed that 60 percent of revenues from large corporations that do not lack funding come from overseas markets. Such a high degree of internationalization and low-cost bonds stemming from low interest have become the stars of economic recovery and the highlights of the U.S. economy. U.S. companies, which dominate two-thirds of global mergers and acquisitions, set a new record total in mergers and acquisitions in the traditionally low-activity month of August; the stock market rose 10 percent in September, traditionally a slump period for the market, the best September performance in 71 years. And in the earning season just passed, U.S. corporations have reported better than predicted growth for the seventh consecutive quarter, a good condition not seen since 1993.

And more importantly, banks have started the expansion of credit. The Federal Reserve’s latest meeting log indicates that bank lending has started to show an upward trend since July — the report states that the credit crunch appears to have peaked and the situation is starting to improve.

In addition, in the months of September and October, Obama pushed for three measures, including $500 billion in renewing transport infrastructure and expansion, a $100 billion R&D tax concession scheme, and a proposal for $200 billion corporate tax cuts. According to Darrell Issa, Vice-Chair of the Committee on Oversight and Government Reform, $512 billion of the $787 billion set aside for the first stimulus package has been spent. Unfortunately, only $18.5 billion were infrastructure dollars; most of the remaining were used to support financially troubled public services in various states.

(The writer graduated from Peking University — International Relations and the China Center for Economic Research — and has worked for an overseas news agency as the head Chinese correspondent stationed in Beijing in the division of Macroeconomic and Financial Policies Analysis.)


赵岩:奥巴马与老布什的同病相怜处

   经济有周期,但是选民没耐性。
  次贷危机后,因为经济复苏缓慢,奥巴马一直背负着“罪名”。面对美国互相配合、又互为牵制的货币政策和财政政策治理结构,面对完全独立的美联储,贵为总统,必须为中期选举交出一份亮眼的成绩单,他别无选择。
  截至发稿时,选情和民意调查显示,民主党大势已去。奥巴马将面对共和党主导的参众两院。
  没有政治家不期待掌声和欢呼,不渴望快速见效的政绩,就像没有医生不期待病人马上下床回家一样。但美国货币决策当局完全独立的地位,恐怕也意在制约职业政治家的“政绩冲动”。
  要复苏,要增速,如果伯南克掌控货币政策的大手肯放“松”些,相信美国历史上的首位黑人总统日子会好过很多。虽然次贷危机引起的全球去杠杆化后,需求成为经济增长的症结,但要取得“疗效”,却不一定靠需求拉动,也可以靠流动性策动。
  无论次贷危机,还是以往的历次经济周期性问题,都权用流感作比,治疗方案除了调动免疫力、调整失衡、稳步复苏,也可以不管三七二十一,直接来一针效力最强的抗生素。两种方案,病人同样起身、出院、回家,而病后免疫力更强,还是耐药性更强?可以权待下次住院再考虑,但一样是你的问题。
  这一切,让人联想起20年前,1990年夏到1991年美国经济的短暂下滑,时任总统老布什非常期待格老放松货币政策,却无法命令格老照办,最终他连任败北,也一直都对格林斯潘紧缩的货币政策耿耿于怀。
  当年,老布什失败的选战中曾出现一个著名标语:“傻瓜,这是经济问题!”而今再现于美国中期选举中,讽刺奥巴马不懂经济治理的意思明显,但老布什和奥巴马的同病相怜之处,恐怕也恰恰是美国货币政策的微妙之处。
  成立于1913年的美联储始终如一的任务被明确为:为美国执掌货币政策这个“技术活”。这让美国的经济大车,由总统和美联储主席两个驾驭者来并驾齐驱。
  美国的中央银行由技术官僚全权执掌,其治理特色,就是更倾向于技术维稳,从技术角度考虑为经济保驾护航,其功过是非是不对总统负责的。
  笔者已经多次论述过,次贷危机后,中美同样采取了名为量化宽松的货币政策,其间最大差别却在于,中国的宽松是宽松银行信贷,而美国是美联储对银行“宽松”,同时紧缩银行对市场的宽松:大幅提高银行资本充足率,向银行超额存款准备金支付利息,抑制银行对外泛滥信贷,准确地讲,宣称无法让银行放贷的美联储,事实上政策性抑制了银行在经济问题治理完毕前的乱放贷,使得美国也持续面临流动性紧张。
  在这样的低利率、流动性却没有泛滥的环境中,美国已成功修复了银行报表,正在修复房地产、就业,虽然速度赶不上外界的急切心情,却显得稳扎稳打。至今美国经济安享低利率红利,却不需要支付通胀代价。这样的货币政策,事实上难免让中小企业成为受害者。
  而手握财税政策,奥巴马直指货币政策的薄弱环节:连续16次为中小企业减免税费,目前虽然尚缺乏喝彩,但如能坚持,长期而言,在正确的道路上,迟早会守得云开的。目前,可以明显地观察到,美国不缺钱的大企业,借助60%收益来自海外市场的高度国际化,低利率时代创造的发债融资成本低廉的环境,已成为经济复苏明星和美国经济的最亮点。在传统并购冷淡的8月份,占全球并购2/3强的美国企业领衔创下了并购额总额的历史新纪录;在传统股市表现低迷的9月份,美国股市上涨了10%,是71年来表现最好的9月。而刚刚过去的财报季,美国企业已经是连续第七个季度实现超过市场预期,这是1993年以来未曾出现过的良好状态。
  而更为重要的是,美国的银行已经开始扩张信贷了。美联储的最新会议纪录显示,美国的银行信贷从7月已开始出现了上升的趋势,“信贷紧缩问题看似已至巅峰,开始好转。”
  此外,9、10月间奥巴马再推三项措施,包括500亿美元的交通基础设施更新及扩建计划;1000亿美元企业研发税收优惠计划;以及一项总额2000亿美元的企业减税提议。在美国第一轮刺激计划的7870亿美元中,据美国众议院监管和政府改革委员会副主席伊萨(Darrell Issa)称,已支出5120亿美元,但遗憾的是,用于基建的仅为185亿美元,其余大部分资金都被用于支持财政陷入困境的各州公共服务。(作者毕业于北大国关学院及CCER,曾为海外通讯社北京站中文组长,主司宏观经济及金融政策分析。)
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