Global economy came "startlingly close to collaps"in 2008: Ben Bernanke

03 November 2015

Bank of England governor Mark Carney has called former US Federal reserve chairman Ben Bernanke as ''a leading theorist and, crucially, practitioner'' who deserves credit for helping stave off the possibility of another ''Great Depression''.

Speaking at an event al Imperial College London Business school, Carney said, ''With Ben at the helm, the Fed acted boldly, bravely, collegiately, with collaboration and innovation.'' 

In his new book, The Courage to Act, a memoir of the financial crisis and its aftermath, Bernanke argues that in 2007 and 2008 the world economy came startlingly close to collapse.

It was only government action led by the Federal Reserve in conjunction with other central banks and governments worldwide that stopped the crisis from becoming even more catastrophic.

Bernanke admitted to being ''a bit jealous of the British system and its ability to get things done'' relative to the tougher checks and balances built into the US system.

Although he's clear that he respects the democratic and open nature of the US system, Bernanke said ''let's distinguish between the normal democratic process and what's happening in the US'' with its polarised Congress and ideological extremists on the left and right.

Bernanke recalled one moment at the height of the crisis when the Fed was formulating plans for an enormous bailout of AIG. Both action and inaction contained huge risks to the US and global economy.

Senate Majority Leader Harry Reid turned to Bernanke and said ''Don't mistake anything anyone has said here as constituting Congressional approval of this action. I want to be completely clear. This is your decision and your responsibility.'' Dr Bernanke told the Imperial audience that he felt ''hung out to dry. It was a lonely feeling. $85 billion is a lot of money.''

Reflecting on how his life has changed since leaving behind such pressured moments, Dr Bernanke said he is ''delighted to be a civilian again. I like looking in the FT and thinking 'that's a serious problem, I hope someone deals with it.'''

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