As Bernanke asks for private sector help, more dismal economic news expected (+ analysis); What will be in Obama's big Iraq speech?; Burma's big leadership reshuffle; US risks losing peace in Sudan; and more

Top of the Agenda: Markets Mull Bernanke Speech, Fed Action

Financial markets are anticipating another round of dismal economic data (Bloomberg) suggesting weakening global growth this week, amid skepticism that the recovery tools outlined by Federal Reserve Chairman Ben Bernanke can work. In his August 27 speech to economists in Jackson Hole, Wyoming, Bernanke stressed that sustaining the recovery would require “appropriate and effective responses from economic policy makers across a wide spectrum.” Bernanke said the Fed's remaining policy tools, such as more asset purchases, would work, but other economists questioned how much impact so-called “quantitative easing” measures would have.

Meanwhile, some economists predict gloomy data on hiring, manufacturing, and household purchases in August will increase pressure on Bernanke to act. Others believe Bernanke's speech suggested the Fed was taking a “minimalist approach” of “watch and wait” (FT). To encourage growth, some economists at the Jackson Hole conference called for extending the George W. Bush-era tax cuts due to expire at year-end.

A new survey by the National Association for Business Economics showed economists are divided over how the government should stimulate the economy (WashPost). Most oppose another stimulus package while also ranking economic growth as a higher priority than reducing the deficit.

Analysis:

In the New York Times, Laura D'Andrea Tyson says the country has become too focused on the deficit and failed to appreciate the stabilizing effect of stimulus spending. Policymakers should provide additional fiscal support for job creation and growth, along with a credible multiyear plan to address the federal debt.

In the Financial Times, Clive Crook says deflation appears to be a greater risk than inflation, making the case for further monetary stimulus soon.

Backgrounder:

Read the text of Bernanke's August 27 speech at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming.

 

PACIFIC RIM: Japan Announces New Stimulus Moves

Japan's government announced new measures to reverse its economic malaise and a sharply rising yen (NYT) and said it would unveil a new stimulus plan.

Burma: Burma's military junta orchestrated its biggest leadership reshuffle (BangkokPost) in more than a decade, which could free up top army officials to run as civilians in November elections.

 

ELSEWHERE:

- Obama to Speak on Iraq Withdrawal
- US Steps Up Sudan Efforts

 

This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org