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XMFSinchiruna (27.97)

A Sinchi Translation of Bernanke's Speech

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August 30, 2010 – Comments (13) | RELATED TICKERS: JPM , GS , GG

For anyone who might remain somewhat mystified by the peculiar language employed by central bankers, I offer this concise and user-friendly translation of Bernanke's recent speech delivered Friday in Jackson Hole, Wyoming.

Decode Bernanke's Pivotal Message to Financial Markets

http://www.fool.com/investing/general/2010/08/30/decode-bernankes-pivotal-message-to-financial-mark.aspx

Excerpts:

Bernanke: Incoming data on the labor market have remained disappointing. Private-sector employment has grown only sluggishly, the small decline in the unemployment rate is attributable more to reduced labor force participation than to job creation, and initial claims for unemployment insurance remain high. Firms are reluctant to add permanent employees, citing slow growth of sales and elevated economic and regulatory uncertainty.
Translation: Who am I kidding? Of course I will print more dollars and try to absorb waning Chinese demand for U.S. Treasuries. For some protection, you may wish to consider some investment in growing gold producers like Goldcorp (NYSE: GG), Eldorado Gold (NYSE: EGO), or a budding silver miner like Endeavour Silver (AMEX: EXK) .

.....

Bernanke: One risk of further balance sheet expansion arises from the fact that, lacking much experience with this option, we do not have very precise knowledge of the quantitative effect of changes in our holdings on financial conditions.

Translation: We don't really know how to operate our biggest remaining tool (the instructions are written in Chinese), and we'll be lucky if it doesn't chop off our leg.

.....

Bernanke: [T]he statement currently reflects the FOMC's anticipation that exceptionally low rates will be warranted "for an extended period," contingent on economic conditions. A step the Committee could consider, if conditions called for it, would be to modify the language in the statement to communicate to investors that it anticipates keeping the target for the federal funds rate low for a longer period than is currently priced in markets.
Translation: And if accelerated quantitative easing doesn't do the trick, we always have words. Oh yeah ... words. Shazam! Abracadabra!

.....

Bernanke: Although what I have just described is, I believe, the most plausible outcome, macroeconomic projections are inherently uncertain, and the economy remains vulnerable to unexpected developments.
Translation: I've been disastrously wrong before, and I will almost certainly be wrong again. Good thing the stakes aren't high.

 

I'd love to know what you think of the primer I've used to translate his remarks. :) Now if only we could get him to just adopt the translated message and skip all that senselessly indirect mumbo-jumbo. Thanks for slapping on a rec to the source article if you appreciate the content, and also for sharing it with your friends and family. Remember, anyone can access my articles easily simply by bookmarking the following link.

http://www.fool.com/feeds/authorheadlines.aspx?author=1632&k=w5ptLfHroNOBubtLSj6MLg&p=FoolAuthor&s=ihesitrf0000001

Fool on!

 

 

13 Comments – Post Your Own

#1) On August 30, 2010 at 9:35 PM, GeneralDemon (27.72) wrote:

"We don't really know how to operate our biggest remaining tool (the instructions are written in Chinese), and we'll be lucky if it doesn't chop off our leg"

Sad, but true.

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#2) On August 30, 2010 at 10:13 PM, MoneyWorksforMe (< 20) wrote:

To lend some credence to this post:

http://www.youtube.com/watch?v=HQ79Pt2GNJo

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#3) On August 30, 2010 at 10:16 PM, dbjella (< 20) wrote:

Thank you for the SLW call.  So far so good.

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#4) On August 30, 2010 at 10:22 PM, silverminer (31.38) wrote:

dbjella,

my pleasure. :)

MoneyWorksforMe,

Thanks ... I'd been looking for that clip. :)

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#5) On August 30, 2010 at 10:27 PM, binve (< 20) wrote:

BESURETODRINKYOUROVALTINE

... :) (or Kool-aid in the case of Bernanke) Thanks! :)

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#6) On August 31, 2010 at 12:19 AM, uclayoda87 (29.51) wrote:

"Jake" Bernanke and "Elwood" Geitner are on a mission from God.  They are the Blues Brothers who must raise an enormous amount of money in a short period of time without ripping anyone off.

The Markets play the role of Jake's girlfriend who was stood up at the altar.  Note how Jake takes responsibility for his actions.

The respect for the law and property rights were Jake and Elwood's guiding principles as they demonstrated how their actions would help both small and large businesses thrive in the Mall, which is the US economy.  Note their concern for the average investor and small business person as they drive home their points.  They are truly in touch with the people.

As they complete their mission, who can resist following them as they return home to a military parade and their just reward.

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#7) On August 31, 2010 at 9:45 AM, outoffocus (23.59) wrote:

SLW = *pops champagne*

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#8) On August 31, 2010 at 10:24 AM, uclayoda87 (29.51) wrote:

AZK = Early Retirement.

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#9) On August 31, 2010 at 10:29 AM, binve (< 20) wrote:

uclayoda,

Great analogy :) And regarding AZK, I completely agree: Aurizon: real deal?

 

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#10) On August 31, 2010 at 10:36 AM, catoismymotor (38.90) wrote:

Sinchy,

I eagerly await a blog or article from you about the upward movement in some silver miners of late. I've read a lot of what others have had to say on TMF and elsewhere. I would like to see how closely your conclusions mirror my own. If we are worlds apart I'll still love you long time.

Cato

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#11) On August 31, 2010 at 10:39 AM, catoismymotor (38.90) wrote:

Bernanke: Although what I have just described is, I believe, the most plausible outcome, macroeconomic projections are inherently uncertain, and the economy remains vulnerable to unexpected developments.

Translation: I'll keep the market supressed in order to load up on some great companies on the cheap. 

 

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#12) On August 31, 2010 at 5:11 PM, rhallbick (99.72) wrote:

The Fed was making plans for increasing rates just four short months ago.  Who knew that the patient would go into cardiac arrest just as soon as the life support machine was removed?  Well, just about everyone on the Web and no one at the Fed apparently.

I think changing the wording in the FOMC statement about holding the Fund rate low for an extended time will just be the beginning.  I understand that the Fed is already buying most of the 90-day Treasury paper.  Their next bullet is to move out to more and more longer-dated paper and pull those rates down even further.  Of interest, I saw where Americans now own more than 50% of the 30-yr bonds outstanding as they continue to pile into bond funds and out of equities.  Perhaps, sending some money to Geitner would be a splendid idea, at least until the long bond goes under 2.5%.
 

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#13) On August 31, 2010 at 6:09 PM, rd80 (98.66) wrote:

Bernanke:  The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do.

Translation:  I have lots of hammers, but there's a thumb on top of every nail.

 

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