Unlike certain CEO resumes and best-selling memoirs that are great works of fiction and public panics about ports and feathered friends, the business issue that might make the biggest impact on the real world has gotten short shift from the media.
Ben Bernanke, newly minted
chairman and -- we keep hearing -- great guy (
You can understand him when he speaks!
) has this high concept to set a specific target range for inflation, say, between 1% and 2%. This range will define the Fed's monetary policy.
What kind of omen is this for interest rates and inflation? Is this the mark of a skillful man, or the tidy theory of an egghead sunk in tenured academic thought a few decades too long? When is The Business Press Maven going to stop asking questions and start answering them?
Right now: These targets could be scary stuff, but this has been glossed over in coverage influenced by relief that Bernanke is not a Harriet Miers or Brownie. Alan Greenspan -- now off taking advantage of the most glaring form of irrational exuberance ever by pocketing six figures to drone to public audiences as only he can -- accomplished all he did through a seat-of-the-pants flexibility. Although he was not always right, more often than not, he outfoxed circumstance.
Nimbleness was his legacy and it, the media assumed, would have a lasting impact. There was a great amount of buzz about a Milton Friedman piece in
The Wall Street Journal
last month that was graciously titled, "He Has Set a Standard." The Nobel laureate, most influential economist of the 20th century and, curiously, Greenspan look-alike, said, essentially, that the
, boss of all bosses, of the Fed even changed -- of all things -- Friedman's mind.
Friedman had long thought it an open question whether central banks had the wherewithal to maintain reasonable prices. Unconvinced, he strongly advocated rigid rules. But Greenspan persuaded him otherwise, Friedman allowed, in a lead that had economists everywhere spitting out their coffee in shock.
Then Bernanke ambles in and starts ruminating, in this complicated, interwoven and unpredictable world, about setting an essential target in stone.
But the media, to its discredit, has done very little hoofwork here. They have instead mired investors in too much honeymoon coverage.
Bernanke's mom and dad VCR'd his swearing in! Bernanke is clear when he testifies to Congress! Bernanke must have a hollow leg because he ate at faculty clubs all those years and did not bloat!
He was even given too easy a time when, in a slightly convoluted statement given to Congress last week, Bernanke seemed to go through the motions of backing off from his signature issue: "Policymakers have learned that no single economic or financial indicator, or even a small set of such indicators, can provide reliable guidance for the setting of monetary policy."
The Business Press Maven, however, read his coy emphasis on "indicators" to mean that he would look at a lot to inform his decisions, but that did not necessarily rule out a more narrow goal. He is feeling pressure to be Greenspan redux and seemed to be throwing a bone to those who turn pale at inflation targeting. But he won't lay low with it forever.
Whatever the case, part of the focus on Bernanke the person rather than the inflation targeter is just the natural arc of things. Everyone gets their honeymoon period. Many reporters, too, are more comfortable with personal anecdotes than impersonal economic theories. So we get mom instead of M1. There is also confidence (perhaps misplaced) that Greenspan's legacy is so strong that it needs no tending. And that the Federal Reserve Board would provide continuity. And even partisan Republicans were a touch relieved than Ben was not some 35 year-old lawyer and political appointee.
On this note, I want to call your attention to a good (and mildly alarming) piece by Noam Scheiber in
The New Republic
about Kevin Warsh, a 35 year-old White House aide with a daddy-in-law who is generous to Republican causes. Warsh was recently named to fill an open seat on the Federal Reserve Board.
He just might have some triumphant ideas about sticking like glue to defined inflation rates, but color The Business Press Maven a touch skeptical.
Pants on Fire
This week also brought news that in an era of "A Million Little Pieces" anti-embellishment, businessmen still lie the old fashioned way: They pump up their accomplishments. Unlike James Frey, the man who claimed to be down and out in order to peddle his therapized tale of woe, David J. Edmondson, (soon-to-be former) CEO of
, went the once-typical route: He turned his resume into a tour de force by claiming two college degrees he did not have.
Considering how stocks like
Bausch & Lomb
got creamed when "proofreading" errors hit the world of CEO resumes, The Business Press Maven has two thoughts.
The first, a playful one, is based on the news that Gabelli Management is looking to capitalize on Middle Eastern wealth by starting a hedge fund that adheres to Islamic law, or Shariah.
The Business Press Maven was hoping evidence might show that CEOs who lie about going to business (or Bible) school led companies that performed better than those managed by CEOs who actually graduated. You could invest exclusively in companies led by CEOs with imaginary degrees -- they were never sunk in academic thought, after all. But evidence was scant and unscientific. Besides, once a CEO is caught red-handed with anything other than a white lie, he is cooked in terms of long-term trust.
The second idea is a more basic one. With news cycles shrinking by the emailed news alert, less basic background checking is being done. The Professor on
, who claimed a suspect six college degrees, has still not been fully vetted.
That's why investors should not leave this to the media. If you see that a CEO said he has a nose on his face, centrally located between two eyes, check it out. There is accessible vetting software, and a call to a registrar's office only costs a nickel.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial website twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children.