'Fed' Up: Sound and Fury... Signifying... What?

Author:Carus, Martin
Position::[VIEW POINT]

"To-morrow and to-morrow creeps in this petty pace from day to day, to the last syllable of recorded time; and all our yesterdays have lighted fools the way to dusty death. Out, out brief candle! Life is but a brief shadow, a poor player that struts and frets his hour upon the stage, and then is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing"

- Shakespeare's Macbeth, Act V, Scene V

* So Insurance Industry... what/who is "creeping in" its "petty pace from day to day"? Why, it is the Federal Reserve and rather than signifying nothing, it is signifying a big something. Right now that "it" (i.e., group capital requirements, enhanced prudential procedures, recovery and resolution plans, new reporting requirements and perhaps even some accounting changes, etc.) may be directed only at designated SIFIs, but it is likely to continue its creeps from day to day. Now hear this!

And talk about "outrageous fortune" (Hamlet, Act III, Scene I), the Federal Reserve Bank of Kansas City took its turn hosting its annual get-together of international banking and financial ministers from Thursday evening, August 25th, through early afternoon on Saturday, August 27, in of all places Jackson Hole, Wyoming! Yes, Jackson Hole, Wyoming, the financial capital of the world and of course, the easiest place to get to. Especially if you're perhaps Jean-Pierre Danthine, President of the Board of Directors of the Paris School of Economics or maybe Norman Chan, Chief Executive of the Hong Kong Monetary Authority. Jan Toth, Deputy Governor of the National Bank of Slovakia and Jose Dario Uribe Escobar, Governor of the Central Bank of Colombia, amongst others, must also have had a nice trek. One hundred twenty-six people are on the roster of attendees! How much do you think this junket cost and who do you think actually paid for it? And what benefit do you think you received for that cost because you (and I) certainly ultimately paid for it?

The title of this event was "Designing Resilient Monetary Policy Frameworks for the Future." The title is ironic considering the question as to whether there is an economic future if policies are developed by these attendees--considering their track record (mine at Saratoga is also not so good either). Of course there was a "reception" and dinner on Thursday night but the big doings started on Friday morning at 8AM with an opening speech by Janet Yellen followed by an 85-minute presentation and discussion on "Adapting to Changes in the Financial Market Landscape." There was a 35-minute discussion on "Negative Nominal Interest Rates" and then a 65-minute timeframe allotted to "Evaluating Alternative Monetary Frameworks." This rough morning workout was then followed by lunch (with a speech by a Princeton professor). The afternoon schedule was easy: "Adjournment!"

The next morning, the attendees watched a panel discussion on "Central Bank Balance Sheets and Financial Stability" for a full 35 minutes following 25 minutes of "General Discussion," in turn followed by "The Structure of Central Bank Balance Sheets," and then they had an "Overview Panel." The show was over by 2PM.

In summary then, 125 heavyweights plus assistants, technical people and meeting professionals, travelled God knows how long to a resort to hear seven presentations for relatively brief periods. Can't you see the value for that? Are you happy?

In contrast, on August 25th and 26th the Wall Street journal published a few interesting articles about the Federal Reserve Board and other central bankers. The first (appearing on Page A2 and authored by Greg Ip) is titled: "Central Bankers' Challenge: Staying Relevant" The first sentence reads: "When central bankers gather this week in Jackson Hole, Wyo., they will be consumed not with some pressing crisis in the global economy but by an existential threat to their relevance." The thrust of the article is...

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