Forbes Inc CEO, Publisher,Mr Steve ForbesTHE United States Federal Reserve should cut its key interest rate by a full percentage point when it meets next week to restore short-term confidence in the country’s economy and solve the credit crisis, sparked by the sub-prime mortgage problems.
The central bank should then focus on the root of the problem and, over the next 12 to 18 months, mop up excess liquidity “in a deliberate and calm manner”.
This remedy, dished out by billionaire publisher Steve Forbes (picture) — speaking at a lunch hosted by the Singapore Press Club yesterday and later to journalists —is much more aggressive than the 0.25-to-0.5-percentage point rate cut that most economists expect the Federal Open Market Committee, the key monetary policy-making body of the Fed, to announce on Sept 18.
US Central Bank, Federal Chairman, Mr Ben BernankeSpeaking to TODAY, the editor-in-chief of Forbes business magazine said: “When you have a crisis like this, you just have to put all your preconceptions and agendas aside and deal with the immediate crisis. Preventing panic is key and the Fed has been a little hesitant on that for a variety of reasons, but they just have to … get over your hang-ups Mr Ben Bernanke (the Fed chairman), deal with the crisis and then clean it up.”
The US presidential election was also very much on the mind of Mr Forbes. His big worry — the rising tide of protectionism in the US.
He warned that the global economy and world trade would suffer if Ms Hillary Clinton, or any other Democrat candidate for that matter, were to be elected to the White House next year.
“There is a lot of protectionist sentiment especially in the Democratic party, far more than during Bill Clinton’s presidency in the 1990s,” said Mr Forbes, ahead of the 7th Forbes Global CEO Conference being held in Singapore.
“When Bill Clinton got his free trade agreements through Congress, most of his party voted against it. It was with Republican support that the free trade agreement with Mexico got through.
“So, that’s what I worry about … protectionism in the trading system.
“It’s going to take strong political leadership to keep these forces at bay. Because if they’re not kept in control, then this great global boom will cease to exist.” — Forbes Inc CEO Steve Forbes on protectionism
Even though he expects the US economy to slow down in the latter half of the year due to the credit crisis, he pointed out that fundamentals remain strong and “next year it should start to pick up again, especially in spring”.
The Global CEO Conference is the seventh in the series and the third held in Singapore. It brings together top CEOs with a combined net worth of US$130 billion ($200 billion).
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