Perhaps it is because he is the most forceful discouraging word at the moment, but for the second day in a row I find myself reacting to a comment from Barry Ritholtz at The Big Picture. What got my attention this morning relates to Barry's reservations about Ben Bernanke's nomination to replace Alan Greenspan at the helm of the Federal Reserve Board of Governors:
My only reservations with Bernanke are a couple of his speeches as a Fed Governor:
The Global Saving Glut and the U.S. Current Account Deficit -- was just so much political blather. It completely fails intellectually.
I have used the global savings glut story many times -- most recently here -- but I do agree with those that have urged us to put more emphasis on the global investment bust side of the story. Although a glut by definition implies a surplus relative to a deficit in something else, from which side of the saving-investment equation the surpluses arise is relevant for many of the policy questions we want answered. But that quibble aside, I think Brad Setser has exactly the right perspective:
But Bernanke's savings glut speech also got two key things right -
The counterpart to the increase in the US current account deficit has been a rise in the current account surplus of the emerging world. He rightly puts far more emphasis on the emerging world than on Europe or Japan...
And Bernanke recognizes that the transition from a housing-centric to an export-centric economy (when it happens) may not be easy.
An intellectual failure it was not.