From The Back Page: The Lacker Two-Step
Bringing you the news you might have missed.
At a conference being held in Charlotte, North Carolina yesterday, Richmond Federal Reserve President Jeffrey Lacker was on hand to answer reporters' questions. Predictable queries were followed by canned answers until Lacker was asked whether or not he thought the economy was in a recession.
His response? He said "It is important not to get wrapped up in dancing on the head of a semantic pin."
Three things immediately popped into my head:
1) Wow, nice two-step there. If it were me, I would have been dumb enough to say 'yes' or 'no.' Guess that's why he's running the show there in Richmond.
2) I couldn't agree more. Why bog yourself down with pesky economic details that could mean the difference between comfort and poverty for millions? Maybe recessions are like good art – you'll know it when you see it. So what if inflation goes to 5%? That's still low-ish, right?
3) I'm absolutely certain Lacker was wearing a brown robe, had a light saber in one hand, and was waving his other hand in front of the reporters when he answered with "It's important not to get wrapped up in dancing on the head of a semantic pin." It had to be a Jedi mind trick - there's no other way those journalists could have let that slide.
Feeling emboldened by his brilliant explanation, I marched down to a local bank and requested they cash out the $50,000 in my checking account. When they told me I didn't have an account there and they had no idea who I was, I just said "It is important not to get wrapped up in dancing on the head of a semantic pin."
The security guard helped me find the door.
From the Fed's Same Mold….
On a semi-related note, Dallas Federal Reserve Bank President Richard Fisher was doing a Texas two-step of his own on Thursday. He was slightly more optimistic than Lacker was about the inflation situation. But, he also said the Fed must "trust and verify" the inflation trend.
First of all, the only person in the world who can pull off the 'trust but verify' routine is its originator - the late Ronald Reagan. Second, I'm not sure Fisher actually said anything. In fact, I'm pretty sure he didn't say anything.
I'm convinced they send these Fed guys to a verbal tap-dance class.
Iceland Feelin' the Chill
This probably affects about three of you reading this, but I found it to be prototypical back page fodder.
On Friday, Iceland's finance minister Arni Mathiesen said the economy there was fine, but that their currency was undervalued. It was his response to Standard & Poor's decision to cut the country's currency rating (which is ultimately rooted in the strength of their economy).
Let's see: The economy isn't as bad as it seems, and your currency should be worth more. Hmm. Why does that sound familiar?
Welcome to the club Arni.
Maybe he should have been holding a light saber and waving his hand when he said it.
Completely Un-minced Words
I tend to shudder when I hear a CEO give a "sunshine and roses" speech, especially when we all know the company is falling apart at the seams. I prefer an honest and candid look, or so I thought.
My 'too honest' alarm was set off when Fiat's CEO Sergio Marchionne in a recent conference said "The car market is horrible." Somehow I don't think his public relations people wrote that speech.
I wasn't sure what to think when he followed that up with "But expectations for the quarter are completely in line." Frankly, having heard his assessment of the market, the fact that expectations are "in line" is the part the scares me.
Bottom line – if an industry insider is prepared to deal with the fallout of uttering the word "horrible," he's got my attention.
Small Banks Targeted
If you think it's irritating when your lender sells your loan to another bank, wait until your bank is sold to foreign investors.
All joking aside, one of the important news items that got buried on Friday under Google's (GOOG) news was Wilbur Ross' intent to buy stakes in some distressed small banks. I don't know which banks he has in mind (though it's not like there are only a few struggling small/regional banks right now – he has 100 to 200 in mind). He's reportedly trying to get together about $4 billion for the effort.
However, he's also fishing for overseas partners to chip in part of the $4 billion. The word is, he'll be in Asia next week talking to potential co-venturers. He's also shopping the idea to potential partners in the Middle East.
His interest in acquisitions is no big deal – that's what he does. The possibly-troubling part is the structure.
These aren't buy-outs or mergers. Any stake he buys in a small bank will just (likely) be shares added to what's called a sovereign wealth fund. Theoretically they have no more influence than a mutual fund, pension, or individual investor would have on the underlying company's operation, theoretically. However, these sovereign wealth funds are being increasingly scrutinized for potential unfair influence on the companies they own pieces of.
It's not earth shattering, but I didn't see enough coverage of the news to suit me. Hence, I'm moving it from someone else's back page to my front page.
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