In response to an FT editorial on 25th August 2016, entitled ‘Central bankers ponder moving the goalposts’
In a few hours time we will all be party to the latest assessment of the economy from the Chair of the Federal Reserve, Dr. Janet Yellen, when she gives her headline address at the annual gathering of economic sages at Jackson’s Hole, Wyoming.
Here is an advance summary of this address:
‘Very few people outside this room will believe a word that I say, and nor should they, but none of that matters. Institutional money managers will have to ‘keep dancing until the music stops’ because anyone who bets against the Fed will lose money and be fired by their investors; politicians will continue to be grateful that our continued manipulations prevent them from having to risk their cozy jobs by being honest with the people they are supposed to serve, the financial press will protect their address books by printing whatever we want them to, and the rest of the plebs don’t matter’
Disclosure: None of the above is true; that is to say – all of it is true, but Janet Yellen won’t say any of it.
Yesterday, the FT printed its pre-Hole thoughts. Amongst all the usual blah blah blah there was this little passage, digitally uttered without a trace of irony, self-awareness, or any other kind of awareness, as far as I can tell:
‘Central banks face considerable difficulty undertaking major redesigns of their policy framework, because they cast doubt on the credibility of their previous strategy and the confidence with which it was espoused. Fundamental changes tend to take place when a previous regime has clearly failed, as with the Bank of England’s adoption of inflation targeting in 1992 after sterling was ejected from the Exchange Rate Mechanism’
Fundamental change doesn't take place until the regime has clearly failed?
Clearly...encouraging the dotcom bubble with easy money wasn't enough to shake their confidence in the tooth fairy...taking interest rates down to 1% in support of a 'have you got a pulse' mortgage policy didn't dampen their ardor for the invisible spaghetti monster...and now after 8 years at zero, $4 trillion in QE, pension funds on their knees, the biggest bond bubble in history...and fundamental change can't come until the regime has clearly failed...
How much evidence do these people need to take the hint that whatever their ridiculous models are telling them, they know absolutely nothing about how healthy markets operate, nothing about how real wealth is generated, and less than nothing about what motivates human beings to spend or save or invest. What they do have is NIRP (no intelligence on real people)
They are dangerous quacks - enough already.
Just in case Dr. Yellen’s speech later today leaves me gasping for the will to live, and I decide to skip ‘In other news this week’ and head for the BBQ…here is a reminder of just some of stuff that has happened over the past seven days:
- Colin Powell has dissed Hillary Clinton’s claim that he ‘gave her the green light’ to use a private email server: http://edition.cnn.com/2016/08/22/politics/colin-powell-rejects-clinton-email-defense/
- Adam Posen, President of the Peterson Institute for International Economics (Washington Stink Tank) thinks ‘Negative Interest rates are not the drama they seem' http://www.ft.com/cms/s/0/2209520e-6860-11e6-a0b1-d87a9fea034f.html#ixzz4IQpIlYjw
The above article will make a great contribution to the mainstream economist blooper reel. Hopefully UK’s Channel 4 will eventually do a '50 Greatest' show...number one is currently Ben Bernanke saying there's no housing bubble, followed at number 2 by Alan Greenspan saying derivatives make things safer…but there’s still time…the eventual winner should receive a statuette of Humpty Dumpty.
- Finally, an unidentified man tried to break in to the Ecuadorian Embassy in the early hours of Monday 22nd August. This is the sanctuary of Julian Assange, founder of Wikileaks, who is currently making life rather uncomfortable for Hillary Clinton. This is an essential contribution to life on earth, but a hazardous one, as many people have learned to their cost over the years. But the most disturbing thing about this particular event is that the British Police, some of whom are situated two minutes away, took two hours to respond to the distress call from the embassy. Here is a release from the embassy:
“The Embassy of Ecuador to the United Kingdom reports that in the early morning hours of 22 August 2016, an unidentified person sought to gain unauthorized access to its embassy in London.
The Embassy has made available to the UK diplomatic police the evidence in its possession to help clarify this serious incident.
According to the Vienna Convention on Diplomatic Relations (1961), the host country has the special duty to take all appropriate steps to protect the premises of any diplomatic mission against any form of intrusion or harm. In this case, the security of the Ecuadorian Embassy in the UK is the responsibility of the British authorities.
The Ecuadorian Government therefore expresses its concern about the inadequate response by the British authorities, who only arrived at the embassy more than two hours after the incident took place.
The Government of Ecuador regrets that, despite the enormous resources that the British government has undertaken to prevent Julian Assange leaving the Ecuadorian embassy, the authorities did not respond more quickly to this extremely serious attempt an unauthorized entry.
The Government of Ecuador expresses its willingness to cooperate with the security forces in the UK to prevent future incidents and renews its commitment to protect Julian Assange.”
Have a good weekend...Best wishes...MarkGB