That's rubbish.
Published July 20, 2011
Next financial crisis may be more severe: Tony Tan
Last downturn did not lead to 'total collapse' thanks to Fed and its chief
By LEE U-WEN
(SINGAPORE) The next global financial crisis could well come as early as five or six years from now, with every possibility that the severity could be much higher than what the world experienced at the last downturn just two years ago.
Painting this grim scenario yesterday, Tony Tan - the former deputy chairman and executive director of the Government of Singapore Investment Corporation (GIC) - said that the global financial system only managed to avert a 'total collapse' in 2008-09 because of the quick intervention led by the US Federal Reserve and its chief Ben Bernanke.
'If not for the strong actions of the central banks and authorities led by the US Federal Reserve and Mr Bernanke, we would be facing 20 per cent unemployment today. The world would be a very bleak place,' said Dr Tan during a question-and-answer session following a public lecture on higher education that he delivered at the Singapore Management University.
Dr Tan, a former deputy prime minister, stepped down from his GIC posts and at Singapore Press Holdings (where he was its chairman) on July 1 to contest the upcoming presidential election, which must be held by Aug 31 this year.
He described how Mr Bernanke took 'unprecedented action to do whatever was necessary' to avoid a complete financial meltdown, providing institutions with unlimited quantities of money to keep the system afloat, and that saved us.
Singapore, too, had to dip into its reserves - built up over the last 40 years - for the first time to weather the storm, added Dr Tan, although it managed to do so 'without compromising our financial integrity and falling into deeper problems'.
'The lesson is, it's not the action which is important, but whether you have the reserves, the backing and the ability to take these actions,' he said.
In Singapore's case, the recession it went through was 'extremely short' but Dr Tan warned that the Republic and other countries should not 'press our luck' going forward.
'If the same thing happens five or six years from now, we may not have another Ben Bernanke heading the US Federal Reserve. All the problems and risks we face today would seem quite trivial compared to the financial and economic catastrophe that could befall us,' he said.
