With smoke still rising from the wreckage of the world's financial system, it's up to three wise men to salvage what's left. And with their eyes on the villainized central bankers of the 1930s, each has tried to avoid the currency wars and protectionism that plagued the world during the Great Depression, aiming instead to steer a calm path through the rubble, above the daily fray of politics and name-calling.
People's Bank of China Governor Zhou Xiaochuan, whose country owns a whopping $1.14 trillion in U.S. debt, has been forced to cope with the unpleasant fact that China's entanglement with U.S. and European markets makes it dependent on the health of Western economies. To that end, he has pursued a course of letting the yuan gradually appreciate, in a bid to slowly build up domestic consumption and decrease China's reliance on foreign markets.
Ben Bernanke, who has become a political punching bag in the U.S. presidential campaign, has had a tougher job. The Federal Reserve chairman's efforts to spur bank lending by expanding the monetary supply were described as almost "treasonous" by Texas Gov. Rick Perry, while candidate Newt Gingrich promised to fire him. Bernanke has nevertheless pressed forward with his plans to keep the Fed's benchmark interest rate near zero to encourage investment and has nudged Congress to get its act together as he warned that America's recovery is "close to faltering."
But the problems of Bernanke and Zhou paled in comparison with those of Jean-Claude Trichet, who as European Central Bank chief faced a full-blown debt crisis in Greece and the potential for a slow-motion fiscal collapse in Italy, Spain, and possibly even France. Trichet, who retired at the end of October, did his best to calm the crisis threatening the euro he helped create, pledging unlimited cash to eurozone banks and buying up the bonds of financially distressed countries. His mounting frustration spilled over during a news conference in September: "We are in the worst crisis since World War II.… We do our job. It is not an easy job." We all feel their pain.
Hanoch Piven
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