Central Casting

Central banking is fun. That’s why everyone wants to do it.

Ha. Not really. Bernanke’s press conference was a tour-de-force, and not just because he said “Hi” to his mother at the end. Bernanke is a stable, capable spokesman who can give a speech or field a question without batting an eye. He learned early on from a stray comment he made to a financial journalist that “loose lips” can sink markets. Through a combination of self-discipline and rigorous rehearsal, he carried off his historic press conference without a hitch.

At first I questioned whether this was such a good thing. After all, what if we have someone less stable in the driver’s seat? But we just have to put “manages press conferences” into the job description. There are certainly competent, capable adults out there who are financially literate and can take questions without blowing up the markets. If the Europeans can do it—and they have for years—there’s no reason why the Fed can’t.

The ECB will soon be selecting a new leader, and for the most part they have been an institution carved out of the Bundesbank mold: stable, solid, boring. Recently, their currency fell because of what Mr. Trichet didn’t say: he left out the “super-extra-vigilent” language and the Euro fell precipitously. What you don’t say can matter as much as what you do.

Currently, the favorite to be the next ECB president is Mario Draghi of Italy. Apparently, the European leaders don’t want a German to head up the agency. Just so long as he can speak well.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

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