Taper – it doesn’t sound like a word of great portent. I first encountered the word in a different context when it was on the list of Pre-Mass tasks for an altar boy. It was one of the more snazzy tasks, along with the Ringing the Bell and being confronted with your neighbour’s mouths at Communion.
You brought a flaming taper out of the sacristy and lit the candles with it. It gave the whole thing a bit of ceremony rather then struggling with a box of Latvian Brown Coal matches up on the stage – I mean altar – and sending match-heads flying onto the pristine white altar cloth. And it wouldn’t really for a 12 year old altar boy to be whipping out an eagle-emblazoned Zippo from beneath the soutane in insouciant fashion like Johnny Cool lighting up a Camel.
From the shape of a taper candle, came the other meaning of taper: to gradually reduce in volume over a period of time. Again, one can’t imagine how a spot of tapering would do any harm. It’s not like ‘cliff’ or ‘collapse’ or ‘crisis’ or ‘’hames’.
Yet the two meanings of the word came together this Summer when Federal Reserve boss Ben Bernanke intimated that the Fed would be tapering its money-printing, 3 trillion dollars worth of global equity markets went up in smoke in 5 days. Everyone panicked because they thought the good times were over.
And again this week, the July minutes of the Fed revealed some bankers thought it might be time to “slow somewhat” the pace of asset buying. Again, you wouldn’t have thought that ‘somewhat’ was that big a deal. It’s not like they said they were going to slow it ‘something fierce’ or a ‘quare bit’. Yet emerging markets tanked. They’ll probably gain it all back again because as everyone knows, markets don’t always make sense but one has to feel sorry for whoever writes the minutes of the Federal Reserve meetings. I imagine them typing with about 20 state bankers looking over their shoulder saying “Oh I wouldn’t put it that way” and “You’ll scare the shite out of them with that.”
Maybe every monthly meeting should begin with “Right, don’t take this the wrong way but …” and “Lads will ye just relax for a second for feck sake, I haven’t said anything yet.”
Ben Bernanke must be really looking forward to his retirement when people will finally stop reading into absolutely everything he says. It must be like having a highly-sensitive spouse who constantly asks “And what’s THAT supposed to mean?”
Clearly the words chosen are all-important if Central Bankers want to ‘somewhat’ influence the reaction of the mentallists in the markets. The philosopher Ludwig Wittgenstein said that “It is in language that it’s all done.” He said this in a completely different context and probably meant something entirely different but by including the words “philosopher” and “Ludwig Wittgenstein” in an article, I’ve sent a strong signal to the markets that I’m fierce clever. I hope they buy it.
Language can be very powerful in the other direction of monetary policy too. Last year, Mario Draghi saved Italy and Spain’s battered hides at least temporarily, by saying the ECB would do “whatever it takes” to keep the euro together. This reassured markets who didn’t ask too much what “whatever it takes” would actually take. The ECB announced ‘Outright Monetary Transactions’ - a precautionary programme which would purchase countries’ bonds if they got into trouble with spreads. It might loosely be subtitled “OMT – only to be used for Special Occasions (and it’s not printing money and the first fella I hear saying that it is printing money is not getting anything)
But whatever they called it, it seemed to do the trick (emphasis on the word trick). Exactly 13 months since “whatever it takes” OMT hasn’t even been used yet. People just wanted someone to say they were in control.
Maybe we could all take a tip from Mario Draghi and learn a lesson from the Fed on how to choose our words more carefully in our own lives in order to provide reassurance and avoid too much questioning.
If your boss is giving you gyp about some deficiencies in your performance, take the time to write a long statement pledging continued commitment to stability in the community, driving efficiencies through goal-oriented programmes and doing whatever it takes. Then put in some qualifiers about everything being within the confines of existing macroeconomic indicators. Tell them there will be an update in a month and press ‘send’.
Just don’t tell them you’re planning on tapering. Even somewhat.
This article was first published in the Sunday Business Post on August 25th