Asked what he thought about Ben Bernanke's big speech on Wednesday, one of our friends in the industry told us about a funny conversation he had drawing a comparison between Bernanke and Natalie Portman.
"We always meet up to talk about what Bernanke said," he tells us.
And this time, everyone agreed that...
"It's like Natalie Portman on the stage when she turns around on stage and becomes the other swan. Bernanke gets up there and no matter how dovish you think he's going to be, he's always much worse."
"He turns into a big dove."
They were referring of course to the statements he made about keeping interest rates "extremely low" for the foreseeable future. They were expecting him to be dovish, aka to say that interest rates would stay low, and that inflation wasn't much of a concern.
(What's interesting here is that some perceived him to be relatively hawkish, so we should add that perception obviously varies among people).
But he swung even further in the dovish direction and said interest rates will be kept extremely low for a long time and that the Fed is going to be seriously on hold for a while.
"Somehow, he always manages to say less than you think he's going to."
As for the rest of what Bernanke said, he thinks that despite what Bernanke said ("we don't plan on QE3") QE3 is a probable scenario, "but it will be data driven." If conditions continue to deteriorate and deteriorate rapidly as a result of the situation in Europe, then a QE3 becomes much more likely much sooner.
Here's one influential economic policy rule that says we need QE3 >
