Wednesday, May 09, 2007
Things just might start getting interesting today. Tonight we have the FOMC statement- the equivalent release last May kick-started the late spring black swan event, though in fairness it was more of a black cygnet. No one is looking for much change in the text, and perhaps they’ll be right. When expectations are low, however, this clearly raises the risk of surprise. In this case, the recent downtick in inflation combined with mixed-at-best activity could argue for a softening of the tightening bias. Whether Big Ben feels sufficiently confident in his inflation-fighting manhood is another question, however.
Before that, today sees testimony before the US House Ways and Means Committee on currency manipulation. No doubt China will feature prominently on the list of topics. Witnesses include assorted worthies from the erstwhile industrial heartland, perennial dollar bear Fast Freddie Bergsten, and, as the token Sinophile, Stephen Roach from Morgan Stanley. It doesn’t take a lot of imagination to anticipate how this will play out:
Rep. Sander Levin, (D) Mich: Hear, hear, come to order. Welcome to Defence Against the Dark Arts. I am your new teacher, professor Levin. OK, who can tell me who is the biggest perpetrator of Dark Arts in the world today?
Mr. Smith, president of Acme Amalgamated Products Corp: China! I mean Voldemort!
Rep. Levin: Very good, Mr. Smith. And who can tell me what spell is most effective against Voldemort?
Mr. Roach: Consumerus savemorus!
Rep. Levin: Hmm, nice try Mr. Roach. But experience has shown that the preparation required to perform that spell makes it difficult to perform another vital incantation, Gettus Electus
F.F. Bergsten: Dollari Fallmorus!
Mr. Roach: Spendlesstus!
Rep. Levin: Very good, Mr. Bergsten, very good. However, we’ve found that that spell has become less effective since Voldemort began using Reservus Accumulato. Mr. Roach, you should know that your suggestion has the same faults as Savemorus. You’ll have to do better than that.
Mr. Williams, Deputy Treasury Secretary for Congressional Testimony: Negociatus Maximus?
Rep. Levin (shaking head): Mr. Williams, you should know by now that that spell is both ineffective and slow-working. Come on, people, think! What is the single most effective spell against Voldemort’s Dark Arts?
Mr. Roach: Budgitdeficito Reductus!
Mr. Smith, Mr. Williams, and Mr. Jones, chief economist of the National Association of Uncompetitive Manufacturers: Tariffus Maximus!
Rep. Levin: Messrs. Smith, Williams, and Jones, you receive an A+. Mr. Bergsten, you get a B+. Mr. Roach, you should know by now that we ran that spell a while ago and it hasn't really worked. You fail- I really have to question your devotion to fighting against Voldemort’s domination.
Harry Potter: (Shakes head.)