The Alchemists: Three Central Bankers and a World on Fire

The Alchemists: Three Central Bankers and a World on Fire

Neil Irwin

Language: English

Pages: 448

ISBN: 0143124994

Format: PDF / Kindle (mobi) / ePub

The inside story of the world’s most powerful central bankers—and the most intense exercise in economic crisis management the world has ever seen

Suddenly, without warning, in August 2007, three men who had never been elected to public office found themselves the most powerful people in the world. They were the leaders of the world’s three most important central banks: Ben Bernanke of the U.S. Federal Reserve, Mervyn King of the Bank of England, and Jean-Claude Trichet of the European Central Bank. In The Alchemists, Washington Post reporter Neil Irwin presents the truly global story of the central bankers’ role in the world economy that we have been missing. Definitive, revelatory, and riveting, it shows us where money comes from—and where it may well be going.


















policy was working. Ensuring, to use the technical term, the functioning of the “monetary transmission mechanism.” There were people who spoke up against the idea that night in Lisbon, for example, ECB Executive Board member Jürgen Stark, he of the Greek mission earlier in the spring. But the identity of the man who broached the idea of bond buying gave Trichet some inkling that he could make the move with the broad support of his committee? It was Axel Weber. Weber was a forceful “If some areas need to be reformed”: “Reform Is a Big Systematic Transformation and Needs Reasonable Arrangements,” Emerging Markets Insight, Mirae Asset, July/August 2012. “trickery”: Peng Yi [“How did Zhou Xiaochuan become a trickster with the interest rate hike”], Economic Observer, October 21, 2010, AFTERWORD: BACK TO JACKSON “What about the commercial-paper market?”:

negotiations over Greek aid to take into account the damage that rapid austerity could cause to the Greek economy. May 17—European finance ministers instigate talks over Greek bondholders taking losses, against Trichet’s vociferous objections. June 16—Mervyn King and new chancellor George Osborne deliver a coordinated message at the Mansion House Dinner in London, announcing plans to bring down budget deficits and to shift far greater control over the financial system to the Bank of

the Swiss bank wasn’t going to find itself short of cash when it was time to pay the money back. “Making it known that we were getting the fire engines rolling was almost as important as what the engines would do once they arrived at the scene,” said one American official. Unlike the earlier phase of the crisis, when Mervyn King and the Bank of England were reluctant partners in the crisis-fighting efforts, this time everyone was on the same page. At 3 a.m. New York time on September 18, four

ally of Obama and the number-two-ranked Democrat in the Senate—the majority whip, whose job it is to round up votes—was on the fence. Much was at stake in Bernanke’s confirmation. Rejection would have left the Fed without a chairman at a time of nearly 10 percent unemployment and shaky confidence in the financial markets. In addition, having one of the president’s highest-profile appointments rejected by a Senate controlled by his own party would have been a major loss for Obama. A fight

Download sample