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US economy: Paulson, Bernanke play it cool

WASHINGTON – THOUGH economic officials have to avoid hysteria so that they don’t cause panic, United States Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke, testifying before the US Senate banking committee on Thursday, went so far the other way that they seemed bored.

Mr Paulson could have been the secretary of ennui as he slouched in the witness chair before the Senate banking committee.

‘Are we headed towards or in danger of being in a recession?’ asked Democratic Senator Bob Menendez.

‘I don’t have a crystal ball,’ the secretary said.

‘Aren’t you underestimating – not paying enough attention to, the severity of the problem in the credit markets?’ inquired Democratic Senator Charles Schumer.

‘It’s one thing to identify a problem,’ Mr Paulson returned. ‘It’s another to know exactly what to do about it.’

Democratic Senator Bob Casey, asked about home foreclosures and the ‘sub-prime crisis’.

Replied Mr Paulson, ‘I didn’t create this problem.’

No, but if he and his fellow Bush economic advisers get any more laid back about the state of the US economy, they will have to make their next appearance before Congress in a horizontal position.

For much of the exchange, Mr Paulson leaned back, draping his left arm over the back of his chair.

Mr Bernanke looked down, admired the chamber’s marble walls, and stroked his beard.

Even a few Republicans on the panel were troubled by the lethargy. ‘Chairman Bernanke, I just want to give you a heads-up: When you see something coming, don’t put it off,’ suggested Senator Jim Bunning.

Senator Bob Corker tried a semantic question to draw out the witnesses. Is it a housing ‘crisis’ or a ‘correction’?’

‘I don’t use loaded words,’ came Mr Paulson’s inevitable reply, ‘so I’ve been using ‘correction’ because it is a correction.’

By contrast, committee chairman Chris Dodd used the word ‘crisis’ 12 times in his opening statement alone.

Mr Paulson must have known he sounded off-key, because towards the end, he threw in disclaimers such as ‘I don’t mean to be overly complacent’ and ‘I don’t mean to sound heartless’.

Heartless? No. But complacent was harder to avoid.

Mr Schumer noted that Wall Street bankers ‘seem much more worried than you guys’.

‘Some see more worry than others,’ Mr Paulson replied.

Clearly.

 

Source: NEW YORK TIMES (The Straits Times 16 Feb 08)

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