Aubyn Hill, Financial Gleaner Columnist
Since the financial sector meltdown in the United States and the resulting worldwide recession that followed that September 2008 event, central bankers and politicians have been fighting hard to maintain a measure of stability.
The judgement is coming and it is fair to say that public opinion in countries around the world is very positive towards central banks and the people who run them.
Politicians' credibility and reputation for good governance and good management, on the other hand, is taking a severe beating.
Americans in recent polls have given their congressional represen-tatives about a 10 per cent approval rating - an all-time low.
I have not seen in recent times any Don Anderson or similar opinion polls rating Jamaica's political leaders. The pervasive grumbling and expressed concerns about the state of our economy and the high incidence of crime would lead one to guess that our political leaders would be in for some pretty poor poll ratings.
At last week's World Economic Forum - that conference of the rich and famous from governments, financial institutions and the entertainment world that takes place in Davos, Switzerland, every January - the consensus was that governments should take more responsibility for the economic management of their countries.
Governments, elected by taxpayers and other citizens, need to rely less on central banks to prop up the world economy and focus more on boosting productivity and finalising new rules for global markets.
Anshu Jain, the co-chief executive officer of Germany's largest lender, Deutsche Bank AG, said in a panel discussion in Davos: "The world has been over reliant on central bankers, they are the new superheroes" - a pretty cool endorsement from an important international banker to a group of financial technocrats who traditionally have been seen as dour and largely faceless.
GLUT OF PLENTY
Central bankers have earned these kudos because when the world financial system was threatened with disaster, triggered by the sub-prime meltdown in the US, central banks created an 'artificial glut of plenty' to push back a global depression.
Over the past six years, central banks have cut interest rates to record lows and literally flooded the world financial system with cheap money. A mixture of views is developing.
The chairman of UBS AG, Axel Weber, stated that low interest rates are swelling asset prices, while Italian central bank governor Ignazio Visco observed that policymakers must make sure the risks are off the table before they begin to reduce stimulus.
Today's central bankers, led by the Federal Reserve's Ben Bernanke in the United States, can only wish for accolades that Bernanke's predecessor, Alan Greenspan, enjoyed.
In Newsweek on December 4 2000, Robert J. Samuelson wrote: "The widespread idolising of Alan Greenspan may be the simplest explanation of why America's post-election melodrama has produced so little popular anxiety. The unspoken assumption seems to be that either (George W.) Bush or (Al) Gore matters less for the economy than Greenspan. As long as he safeguards prosperity, the country can bear the suspense of not knowing the next occupant of the White House."
Direct disrespect for the most powerful politician in the world and near worship for a non-elected central banker whose gentlest of phrases caused tremors in financial markets and bank's board-rooms.
Fortune magazine once ran a cover story titled 'In Greenspan We Trust', while BusinessWeek's cover declared 'Alan Greenspan's Brave New World'. Time magazine put Greenspan and US Treasury Secretary Robert Rubin and his deputy Lawrence Summers on its cover with the headline: 'The Committee to Save the World'.
Even if one does not attend church or synagogue regularly, the ubiquitous adulation sounds a tad idolatrous.
One has to be careful about all this hero-worshipping. With Fortune replacing God with Greenspan on the dollar bill and BusinessWeek throwing out Huxley's classic with 'Greenspan's Brave New World', it was easy for banks, mortgage lenders and home buyers in the US and around the world to fall into the trap of believing that the magician, Alan Greenspan, would keep the economy growing forever.
Some believe that Greenspan kept interest rates too low for too long and caused the sub-prime debacle.
HOW THE BOJ FARED?
Central bankers must be getting weary from such very heavy lifting for so long. Interest rates are at historic lows and for economic growth to happen, it will need regulatory and legislative freedom with fiscal encouragement where possible.
Fostering economic growth in today's economic scenario is arguably the most important job of governments, especially elected ones.
The Bank of Jamaica, unlike the Federal Reserve and the Bank of England is, technically, a creature of the Ministry of Finance and so is not as independent as some of its foreign counterparts. Still, in practice it has operated quite independently.
Former Governor Derick Latibeaudiere should be given more credit for keeping inflation under relative control and avoiding a sub-prime-type housing boom and bust with fairly high interest rates up to September 2008.
Conversely, he must take some of the blame for keeping interest rates quite high after the 2008 international financial meltdown when interest rates worldwide were jumping down cliffs to get to lower levels.
The governor's perennial concern, inflation, was under control and some economists and financiers even feared deflation. The bottom had dropped out of world demand and eased inflationary pressures.
Governor Bryan Wynter may have used up his NIR funds too early to defend a currency level that was and is probably not sustainable.
Overall, the BOJ has kept the banks safe after the problems in the 1990s. The next few months could present a stern test for Governor Wynter and his team.
Jain of Deutsche Bank thinks that "we've got to take the burden off our central bankers' shoulders and, really, governments and business leaders need to pick up the slack".
Political leaders, please listen.
Aubyn Hill is the CEO of Corporate Strategies Limited and was an international banker for more than 25 years. Email email@example.com; Twitter: @HillAubyn; Facebook: facebook.com/Corporate.Strategies