In a Dark Year, a Lighter Side at the Fed

The Federal Reserve’s 2008 transcripts are shot through with dark and corny â€" very dark, and very corny â€" humor.

Timothy F. Geithner, then the president of the New York Fed, gets a laugh for describing a discussion as being “like pro wrestling.” Ben S. Bernanke, then the chairman, admits that he can play “Jekyll and Hyde quite a bit and argue with myself in the shower and other places.” After a report shows the economy growing at a 2 percent annual pace, he also gets a laugh for quipping that Republicans shold run on the slogan, “The Economy: It Could Be Worse.”

The humor can be grouped into a few categories. First, the sardonic asides of policy makers trying to prevent the financial markets and whole economy from going belly up. Second, the inquests of the Dallas Fed president, Richard Fisher. Third, a long discussion of canaries in coal mines. And finally, the blackly humorous anecdotes that Fed officials collect from local business leaders. Here’s a small selection.

A Dismal Science

CHARLES PLOSSER: Listening to the staff discussion I have certainly come to understand why everyone continues to believe that economics is a dismal science.

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TIMOTHY F. GEITHNER: Let me just start by saying it’s not all dark.

FREDERIC MISHKIN: Don’t worry, be happy?

MR. GEITHNER: I’m going to end dark, but it’s not all dark.

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MR. MISHKIN: I think we’re all trying to be cheery here. It reminds me a little of one of my favorite scenes in a movie, which is Monty Python’s “Life with Brian.” (It is actually “Life of Brian.”) I remember the scene with them there all on the cross, and they start singing, “Look on the Bright Side of Life.”

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DONALD KOHN: Anyone who thinks he or she understands what’s going on is either a lot smarter than I am or delusional â€" or both.

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JANET L. YELLEN: In the run-up to Halloween, we have had a witch’s brew of news. Sorry. The downward trajectory of economic data has been hair-raising â€" with employment, consumer sentiment, spending and orders for capital goods, and home building all contracting â€" and conditions in financial and credit markets have taken a ghastly turn for the worse.

From Mr. Fisher

I searched the newspapers for something to read that didn’t have anything to do with either a rogue French trader or market volatility or what the great second guessers were blabbing forth at the chat show in Davos. And in doing so I happened upon a delightful article. I hope you saw it in the Saturday New York Times on the search for a motto that captures the essence of Britain. My favorite was nemo ne inclune lacet, which very loosely translated, I think, means “never sit on a thistle.” Well, that’s where I am.

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I know we are suffering because our deputy secretary here sitting to your right, Mr. Chairman, just gave me a candle and had me blow it out with no cake attached.

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My thought is that [this policy] encourages the financial markets. They’re not going to be satisfied. I said this last time. It’s Jabba the Hutt. They will keep asking for more and more. We have to quit feeding them. I’m in a pizza mode, by the way, in this conversation. I do have a suggestion, however.

MR. MISHKIN: You mean Pizza the Hutt, not Jabba the Hutt.

MR. FISHER: Pizza the Hutt, that’s right.

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One of my tutors at St. John’s had a python named Julius Squeezer.

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By the way, I notice that these little bottles of water have gotten smaller â€" this will be a Visine bottle at the next meeting.

The Canary in the Coal Mine

MR. MISHKIN: I do not put a lot of stock in consumer surveys. But I tend to look at financial markets as being the canary in the coal mine. Though being a New Yorker, I actually have been in a coal mine - at the Museum of Science and Industry in Chicago. It’s really cool. All of you should go there someday when you go visit Charlie.

RANDALL KROSZNER: But he has never seen a canary.

MR. MISHKIN: I have seen a canary. But the key is that the canary has not keeled over.

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MR. GEITHNER: The transcript says, “Mishkin says canary wheezing but hasn’t keeled over.” I support Alternative B. I think you could frame this as a modest recalibration of policy with a hawkish soft pause.

MR. BERNANKE: And a wheezing canary.

MR. GEITHNER: I don’t think the canary is wheezing.

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MR. MISHKIN: If the canary starts to look as though it is keeling over, we have to move very quickly, and so I am going to watch that canary very, very carefully.

MR. FISHER: Before the python gets it.

Regional Reports

MR. FISHER: My biggest disappointment, incidentally, was that the one bakery that I’ve gone to for 30 years, Stein’s Bakery in Dallas, Texas, the best maker of not only bagels but also anything that has Crisco in it, has just announced a price increase due to cost pressures.

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MS. YELLEN: A banker in my district who lends to wineries noted that high-end boutique producers face a distinctly softening market for their products, although sales of cheap wine are soaring.

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MR. FISHER: The one ray of sunshine that I was able to find is that one large law firm, Cravath, has announced that it is not increasing its billing rates in 2009, and other law firms are actually planning to respond by cutting their billing rates. One woman whom I know summarized it this way: “This is the divorce from hell. My net worth has been cut in half, but I am still stuck with my husband.”

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MS. YELLEN: East Bay plastic surgeons and dentists note that patients are deferring elective procedures. Reservations are no longer necessary at many high-end restaurants. And the Silicon Valley Country Club, with a $250,000 entrance fee and seven-to-eight-year waiting list, has seen the number of would-be new members shrink to a mere 13.

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MR. MISHKIN: I am very skeptical of [household surveys] because they tend to react very much to current conditions. Also, if you ask people what TV shows they are watching, they will tell you that they are watching PBS and something classy, but you know they are watching “Desperate Housewives.”

MR. BERNANKE. What is wrong with “Desperate Housewives”?