How to Ride Out a Brush With Market Panic |
At the peak of the 2008 global financial crisis, Tim Geithner, then president of the Federal Reserve Bank of New York had advice for a prominent Wall Street chief executive: Before you speak in public, banish the fear from your voice. If central bankers in Asia are to prevent market somersaults this week from morphing into more serious problems, they should keep this in mind.
Underplaying the importance of the gyrations — should they continue — risks appearing to investors like nobody is in charge. Too dramatic a response, and it might spur more anxiety. Policymakers should also keep some measures in reserve. The bulk of what they’ve had to say in Asia has been declarative. That’s a good start. The Middle East conflagration has thrown up big challenges. But there are important issues that haven’t gone away.