Ben Chu: Last laugh for the luddite

Ben Chu@Benchu_
Wednesday 07 August 2013 01:33

Outlook Many claim to have foreseen the global financial crisis, but Raghuram Rajan's claim is unimpeachable. In a 2005 paper presented at the annual central bankers' conference at Jackson Hole, Wyoming, the former chief economist of the International Monetary Fund warned, in considerable detail, of a possible financial crisis brought on by hidden risks in the banking sector.

Read the paper today and it's remarkably similar to the sort of thing Andy Haldane at the Bank of England has been writing since the crisis about systemic financial sector risk. Back in 2005 the former US Treasury Secretary Larry Summers, a long-standing champion of financial deregulation, dismissed Mr Rajan's prescient warnings as "luddite".

Yesterday Mr Rajan was named as the new governor of India's central bank. And by coincidence Mr Summers, who has never admitted he got it wrong on deregulation, is campaigning hard to be named as the next chairman of the US Federal Reserve when the incumbent, Ben Bernanke, steps down later this year.

But after everything we've been through, shouldn't the White House be looking for someone a little more, well, luddite to replace Mr Bernanke?

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