Solow Resenha Livro de Bernanke sobre a Crise Financeira

A financial panic is set off by an event, a shock. The gunpowder that exploded in 2007–2008 was the collapse of the housing bubble, the unsustainable but nevertheless foolishly and persistently anticipated rise in house prices that supported so many exotic and risky securities. Bernanke remarks that, in terms of sheer magnitude, that initial shock was comparable to the bursting of the dot-com bubble in 2001. But nothing much happened then, at most a minor recession. How come? His answer is that the financial system had become more “vulnerable” in the intervening years. He has in mind the dangerous combination of leverage, complexity, and opaqueness already described. His preferred answer is better and more system-oriented regulation. One has to ask then why regulation failed to see the crisis of 2007–2008 coming and take action to head it off. Bernanke suggests that regulators were lulled into inattention by the so-called Great Moderation: the fact that for almost a quarter-century after the mid-1980s, the American economy experienced fairly even-keeled growth, unmarred by financial disturbance. Our masters are all too eager to take the Panglossian view that a system of “free markets,” including financial markets, is self-regulating and self-stabilizing. Bernanke is surely right about this. The scholar of the 1930s has to be aware that there was similar talk about the New Era in the years before 1929. Dr. Pangloss has lots of helpers among the sharpshooters who profit most from the absence of effective oversight, and among simpleminded ideologues. They are still with us. What about the possibility of cutting off the bubbles before they become dangerously large? It has often been proposed that the Fed should limit asset-price inflation in much the same way that it is committed to limiting goods-price inflation. In that view, the Fed should have choked off both the dot-com and house-price bubbles before they became large enough to do much damage. The usual counter-argument is that it is difficult to distinguish an asset bubble from a rise in price that is justified by “fundamentals.” There is something to that. If the Greenspan Fed had somehow quickly ended the boom in dot-com stocks, it would have been savagely beaten up by those who were profiting from the boom for having strangled the blue-sky industry of the future in its cradle. It is hard to imagine a definitive defense to the charge; the danger you have forestalled is nowhere to be seen. A rather different counter-argument is that if the Fed is to undertake the prevention of asset-price inflation, it needs an added and appropriate instrument for doing so. A blunt tool, such as higher interest rates, won’t do at all: it may be enough to stop a bubble, but it may also precipitate a recession. In the case of a pure stock-market bubble, the imposition of higher margin requirements might be a good way to discourage speculation. Many large stock purchases involve only a fractional commitment of cash (the “margin”). The rest is borrowed, usually from the broker. The Fed has the power to require higher margins. Some speculators will be deterred. The rest can still take a loss, but they are losing more of their own money, with less danger to the financial system. The analog in more complicated bubbles would have to be some sort of graduated increases in capital requirements for participants, keyed to somebody’s estimate of the inherent risk and dangerousness of the “bubble” in question, as well as the likelihood that it is actually a bubble. One can imagine the flow of pious outrage from those who were looking to make a killing. This is a tough question, and no chairman of the Fed would want to muse about it in public. For safeguarding financial stability in the future, Bernanke seems to count heavily on the provision in Dodd-Frank that establishes a committee of regulators charged with keeping an eye on “systemically important” financial institutions, whatever they look like, in order to warn them away from dangerously risky behavior and/or impose extra capital requirements. We will have to see how that works out: at a minimum there will need to be a workable definition of “systemically important” that takes adequate account of the ability of large financial institutions to take evasive action. And there will have to be a lot of international coordination and joint action.