Wednesday, May 25, 2011
News from the Fed Page
On Leadership
Posted at 03:55 PM ET, 05/23/2011
When Volcker speaksBy Paul Light
Former Federal Reserve Board Chairman Paul A. Volcker has been relatively quiet these last few months as the U.S. and world has continued its descent into financial chaos. He exited President Barack Obama's now-defunct Economic Advisory Board last January, and continues to eschew press releases and op-eds.
This doesn't mean Volcker won't cajole and criticize, but his is a measured voice in a caldron of instant reaction. He does think banks should be banks, not derivative machines, and is a steady voice against attacks on the Fed. But he rarely talks about the many threats we face as the world economy stumbles.
Yet he recently did just that in Portland, Oregon, in a little noticedspeech titled "Out of Time." Delivered to the World Affairs Council of Oregon on May 6, the speech is a sobering call for action in a time when unemployment remains high, prices are rising, real income remains flat and wealth continues to make its way to the tiniest percentage at the top of the economic pyramid.
So what is the answer to the crisis?
Volcker offered three proposals, each one no doubt difficult to enact, but no less essential for global resilience.
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First, Volcker argued that the world must liquidate its biggest yet most vulnerable financial institutions, and pursue coordinated action to strengthen the rest.
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Second, Volcker argued for a significant reduction in the federal budget.
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Third, Volcker turned to confidence in our institutions.
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READ THE FULL STORY:
http://www.washingtonpost.com/blogs/light-on-leadership/post/when-volcker-speaks/2011/03/18/AFfEPy9G_blog.html?wpisrc=nl_fedinsider
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