Bill & Mohamed, You're Wrong

Mohamed El- Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co. (PIMCO), center, with Alexandre Tombini, president of the central bank of Brazil, and Lawrence Summers, a professor at Harvard University and former U.S. treasury secretary Photograph by T.J. Kirkpatrick/Bloomberg

However, following every previous U.S. recession since World War II, the unemployment rate has returned close to its pre-recession level, and, although the recent recession was unusually deep, I see little evidence of substantial structural change in recent years.

Monetary Policy since the Onset of the Crisis, Remarks by Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyo., Aug. 31, 2012. (Corrects after Federal Reserve revises footnote three.)

Tampa and Charlotte note. No fact-checking at the Fed. They nailed footnote three.

That I highlight the above is not news. Others, see Harm Bandholz at UniCredit, did as well. I’ll keep this Labor-Day short. (Does Google Translate have a Fedspeak-to-English option?)

• “However” is loaded. It signifies that most of the above-and-below is boilerplate. This is what matters.

• “every” means no one today has a clue about economic history and post-WW II (1947) is just a Leontief starting point. “Every” since the Post-Napoleonic War era is more like it. Exactly which Depression/Contraction would you like to talk about?

• “and,” is the Chairman’s shift from then to now, and the comma is fraught, fraught with significance. What is the standard-error on our structural/cyclical guess?

• “although” means this-time-is-different. See Carmen and Ken.

• “I” is the majestic singular “Royal I,” in that he is the Chairman and we are not. (Apologies to Silversun Pickups.)

Finally, “structural” suggests permanent as in things will forever not be normal. Cyclical suggests we go, para-normally, up and down and up and down and up. …

Translation: Chairman Bernanke hit the ball out of Fenway across the Massachusetts Turnpike. … Wait. The Red Sox are toast. Go Orioles! Bill and Mohamed, you’re wrong. Discuss.

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