Tuesday, October 09, 2007

Smoking Dope With the Open Markets Committee

I've long wondered what the timbre of the Fed's Open Markets Committee meeting most resembled. Are they stern and authoritarian? Efficient and businesslike? Collegial and ummm errrr tweed&port? Or, perhaps, iconoclastically laid back, maybe even irreverent. But never in my wildest imagination (until yesterday) did I ever think it would resemble that which is accurately depicted in the picture (right) taken from a friendly mole's hidden camera inside the meeting room during the most recent mid-September FOMC meet.

Or at least it confirms my suspicions as to the most logical explanation for the FOMC's behaviour. For amongst other analyses, concerns, discussions and projections that could justify more or less any policy action, they seem to be suggesting that a morning toke (technical term for inhalation of Cannabis into one's lungs) is what is required to take the edge off of the effects of last night's session, which was itself a nest-loop of hangover & repair-response for the same (or for that matter the last decade-and-a-half of party-central):
Similarly, the impaired functioning of financial markets might persist for some time or possibly worsen, with negative implications for economic activity. In order to help forestall some of the adverse effects on the economy that might otherwise arise, all members agreed that a rate cut of 50 basis points at this meeting was the most prudent course of action. Such a measure should not interfere with an adjustment to more realistic pricing of risk or with the gains and losses that implied for participants in financial markets.
Yes maybe I am cherry-picking, but the minutes themselves are all over the map. Why do other Central Banks from cultures not necessarily known for forthrightness appear to be able to present more cogent analysis and policy prescriptives whereas our own Fed from the land of NoBull-PlainSpeak hems haws and hedges before making a nitwitted conclusion and justifying it. Instead they are rife with the same seeming interminable indecisiveness that a pot-head encounters when trying to decide whether to quell the midnight munchies with a Big-Mac & Big Fries or Quarter-Pounder w/Medium Fries... or no wait, perhaps it'll be the McNuggets-6-pack with...


Anonymous said...

And to think; they've had a speciall committee working on Fed communications since almost the beginning of Bernankes term!
Which leads me to proffer that the signals sent by what they have actually done, and not said, is loud and clear; "Trumoil in the financial sphere will not be tolerated. Credit must flow." If one takes all of Ben's work into account before taking the chair it seems clear he is undoubtdly a hammer, it's all depression prevention nails. (Like I said before, Big Ben might be the biggest bear of them all)
The only question I think remains is; How much and for how long can the bond market stand?

Anonymous said...

With all due respect, oh ye of obvious superior intellect, please refrain from confusing us dopesmokers with psychopathic money puppets. We are in fact the antithesis of all you attempt to describe.

Perhaps being lied to on a fairly regular basis (say every second of the day), drives us into the whetstone of alternate reality. A reality, I might add, more grounded in reality than their reality.

Pancho said...

LOL...excellent "Cassandra"...excellent...