The Fed’s Dennis Lockhart wants you to know: He doesn’t see the US plunging into a two-decade slump that will send stock markets careening to one-quarter of their peak value in 20 years. So we’ve got that going for us.
The United States will not experience a protracted period of economic weakness like Japan did in the 1990s, but the U.S. financial system is hurt by a lack of clear information about banks, Atlanta Federal Reserve Bank President Dennis Lockhart said Wednesday.
One similarity between the current U.S. financial system and Japan’s situation in the 1990s “gives pause,” Lockhart said — the opaque nature of areas of the U.S. banking system.
“Much has been written recently about the so-called ‘shadow banking system’ of hedge funds and complex securities in the United States that also renders much of our financial system opaque,” Lockhart told the Japan-America Society of Georgia in Atlanta.
“Improved transparency must accompany other reforms as an early priority,” he added…
Lockhart said the United States, like Japan in 1989, is experiencing sharp price declines after the bursting of an asset bubble, but he anticipates a quicker U.S. recovery.
“I do not expect this country to experience the same protracted weakness as Japan,” he said.