David Wessel, the Pulitzer Prize-winning journalist, economics editor of The Wall Street Journal and author of In FED We Trust, speaks to Paul Keating, the former prime minister, treasurer and architect of Australia's economic resilience. The world's problems might actually get solved in this meeting of dazzling minds.
Paul Keating was the 24th Prime Minister of Australia. Since leaving parliament, Keating has been a director of various companies, including the Chairman (international) of Carnegie, Wylie & Company - a Sydney based investment bank.
George Megalogenis is The Australian's resident nit-picker. He spent 11 years in the Canberra press gallery between 1988 and 1999 before returning to Melbourne as a senior writer.
David Wessel is economics editor for The Wall Street Journal and writes the Capital column, a weekly look at the economy and forces shaping living standards around the world. He is responsible for overseeing coverage of the Fed and the Journal’s daily coverage of the macro economy, global trade and economic trends. He appears frequently on National Public Radio and WETA’s “Washington Week.”
David has written two New York Times best-sellers: “Red Ink: Inside the High Stakes Politics of the Federal Budget” (2012) and “In Fed We Trust: Ben Bernanke’s War on the Great Panic” (2009).
He was deputy bureau chief of The Wall Street Journal's Washington bureau. David joined The Wall Street Journal in 1984 in Boston, and moved to Washington in 1987. In 1999 and 2000, he served as the newspaper’s Berlin bureau chief.
A native of New Haven, Conn., and a product of its public schools, David previously worked for the Boston Globe, the Hartford (Conn.) Courant and Middletown (Conn.) Press. A 1975 graduate of Haverford College, he was Knight Bagehot Fellow in Business & Economics Journalism at Columbia University in 1980-81.
David has shared two Pulitzer Prizes, one for Boston Globe stories in 1983 on the persistence of racism in Boston and the other for stories in The Wall Street Journal in 2002 on corporate wrong-doing. He is also the co-author, with Wall Street Journal reporter Bob Davis, of Prosperity, a 1998 book on the American middle class.
David is a trustee of Temple Sinai in Washington, D.C. He and his wife, Naomi, have two children.
David Wessel, economics editor for The Wall Street Journal and author of In Fed We Trust, argues that Fed Chairman Ben Bernanke was one of the biggest heroes during the recent financial crisis. Wessel explains that Bernanke was uniquely suited to handle the crisis, and that while the economy still hasn't recovered, it "would've been worse had he not done the things he did."
Journalist David Wessel jokes that when stupid people ran Wall Street, the economy was in fine shape. "The problem is that all these clever people went into banking, and they started to invent all these fancy products," he says. "And that's when we got into trouble."
U.S. central bank system consisting of 12 Federal Reserve districts with a Reserve bank in the principal commercial city of each district. The system is supervised by a board of governors in Washington, D.C., as well as by various advisory councils and committees. As a result of the Federal Reserve Act of 1913, all national banks are required to join the system; state banks may join if they meet membership qualifications. The Federal Reserve is responsible for monetary policy. The original act set fixed reserve requirements for the U.S. fractional reserve banking system. It allowed each district bank to determine its discount rate, the rate it charged on loans to member banks. The modern Federal Reserve resulted from the Federal Reserve Act of 1935, which allowed the board to determine reserve requirements within defined limits. It became responsible for approving the discount rates of the district banks. Most importantly, the act created the Federal Reserve Open Market Committee, which is responsible for conducting operations in financial markets that increase or decrease the amount of reserves in the system. If the Federal Reserve wants to ease monetary policy, it will use open market operations and increase the amount of reserves through the purchase of financial assets. Conversely, it can tighten monetary policy through the sale of financial assets.
Downward trend in the business cycle characterized by a decline in production and employment, which in turn lowers household income and spending. Even though not all households and businesses experience actual declines in income, they become less certain about the future and consequently delay making large purchases or investments. Consumers buy fewer durable household goods, and businesses are less likely to purchase machinery and equipment and more likely to use up existing inventory instead of adding goods to their stock. This drop in demand leads to a corresponding fall in output and thus worsens the economic situation. Whether a recession develops into a severe and prolonged depression depends on a number of circumstances. Among them are the extent and quality of credit extended during the previous period of prosperity, the amount of speculation permitted, the ability of government monetary and fiscal policies to reverse (or minimize) the downward trend, and the amount of excess productive capacity. Comparedepression.
@Tommy You don't understand: The problem is you are running out of gas. The solution is to get more gas at the next station. So obviously if you step on the accelerator you will get there faster.
The solution to a credit bubble is to extend more credit.
The solution to prevent a Heroin addict from experiencing withdrawal symptoms is to inject ever greater amounts of Heroin, forever.
Brilliant reasoning there.