Most of the central bankers and the head of the IMF ignored the power of voters in the developed nations, where growth and deficits are twin problems, when they made comments at the recent Jackson Hole annual financial forum.
Politicians, however, were aggressively criticised for their failures to address stimulus needs and sovereign debt trouble. The bankers’ suggestions about more political cooperation ignore the upcoming national elections or changes in power in some of the countries with the largest GDPs in the world.
Ben Bernanke was the first of the banker to comment that the battle among elected officials in his country — the U.S. — was the most formidable stumbling block to the creation of solutions for the failure of GDP growth and deficit reduction. He said:
The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses. Although details would have to be negotiated, fiscal policymakers could consider developing a more effective process that sets clear and transparent budget goals, together with budget mechanisms to establish the credibility of those goals.