Spot the Elephant

Thursday, October 26, 2006 | | 0 comments »


Those hoping for something in the vein of Elmore Leonard were disappointed by the 25 October Federal Open Market Committee (FOMC) press release.

Despite the presence of the right mix of economic elements necessary for a thriller there is no doubt as to the bland authorship. The statement is clearly their own work, copied around the table (a few times) for agreement before release. Unemployed skilled ghostwriters up and down the USA remain glum: they too could have left all options on the table but at least given us all a nice ride on the way there.

Style, of course, is one matter, content another. Some commentators argue the FOMC’s actions do not matter much. Indeed, that its power is perceived as key to most investors is odd given a demanding fiscal environment outside its control (particularly those elements of which are politically driven) and a US sovereign debt market dominated by foreigners.

In mitigation to this general obsession with the FOMC and its fixation on “contained inflation expectations” here is a small, graphical comment.

Exhibit 1: Spot the elephant


Yet the release remains a bestseller in financial circles.

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