Ben's J-Hole Speech: Goldman's Take

Tyler Durden's picture


Ben's prepared remarks went off embargo at 10:00 am Eastern. The text (just the body, excluding appendices) had 4,549 words, 254 commas and 173 periods. It took Goldman 40 minutes to read it, write a 579 word response, proofread, get it through compliance, and shoot it to all clients. Now that's efficiency. The title? "Bernanke Makes Case for Effectiveness of Unconventional Easing" of course, even though the real shocker in the speech was that Bernanke for the first time as far as we recall admitted that the sentiment that QE is not working may result in a Catch 22 where every incremental and larger QE episode has diminishing returns (just as we have been warning for years). 

Here is the full Goldman's pret-a-portersender response:

Bernanke Makes Case for Effectiveness of Unconventional Easing

Fed Chairman Bernanke's Jackson Hole speech makes the case for unconventional monetary easing--in particular, balance sheet and communication policies--as an effective tool, even if the "hurdle is higher" for the use of such policies. In a dovish conclusion, he notes the poor state of the labor market as a "grave concern".


1. Fed Chairman Bernanke's keynote speech at the annual Jackson Hole conference reviewed monetary policy during the crisis, described the methods of action of balance sheet tools and communication (guidance) policies, and reviewed the potential costs of asset purchases. In conclusion, Bernanke emphasized that unconventional easing can be an effective tool of monetary policy and highlighted the still-weak state of the US labor market as a "grave concern".

2. Bernanke began his speech with a discussion of policies during the crisis; while the details of what occurred here are well known, this section was noteworthy for a frank admission that given the "limited historical experience" with nontraditional monetary easing, policymakers "have been in the process of learning by doing".

3. Bernanke discussed the ways in which balance sheet policies can affect the economy--focusing on the imperfect substitutability of assets and the consequent ability for reductions in the supply of a given asset to affect its price/yield; he also noted the signaling effect of such policies and the potential for them to aid the functioning of distressed markets. He cited research showing that asset purchases lower Treasury, MBS, and corporate bond yields, and noted "a study using the Board's FRB/US model of the economy found that, as of 2012, the first two rounds of LSAPs may have raised the level of output by almost 3 percent and increased private payroll employment by more than 2 million jobs, relative to what otherwise would have occurred", though with the caveat that "It is likely that the crisis and the recession have attenuated some of the normal transmission channels of monetary policy relative to what is assumed in the models". As for rate guidance, Bernanke defended the current forward guidance as "broadly consistent with prescriptions coming from a range of standard benchmarks" but went on to note its influence on market expectations and say that "a number of considerations also argue for planning to keep rates low for a longer time than implied by policy rules developed during more normal periods."

4. Bernanke reviewed the potential costs of nontraditional policy in more detail than previously. For asset purchases, these included 1) possible impairment of market functioning, 2) public/market concern about the Fed's "ability to exit smoothly from its accommodative policies", 3) risks to financial stability as lower rates push investors to search for yield in riskier assets, 4) financial losses for the Fed on its securities holdings if rates rise sharply. He summed up by saying "the hurdle for using nontraditional policies should be higher" but that "we should not rule out the further use of such policies if economic conditions warrant."

5. The speech concluded with the near-term outlook--held back in Bernanke's view by a slow recovery in housing, government fiscal drag, and financial market stress (particularly because of the Euro area crisis). The final note was dovish, with Bernanke emphasizing that "we must not lose sight of the daunting economic challenges that confront our nation" and professing "grave concern" with the weak labor market and the potential structural damage that could result from persistently high unemployment.

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Fri, 08/31/2012 - 10:58 | 2752683 Aziz
Aziz's picture

Sorry muppets — We promise we'll be right THIS time!

Fri, 08/31/2012 - 11:00 | 2752695 Almost Solvent
Almost Solvent's picture

Who you gonna believe?

Us or your lying eyes?

Fri, 08/31/2012 - 11:07 | 2752705 Pladizow
Pladizow's picture

If the promise of crack to the addict works just as well as delivery, why deliver?

"The text (just the body, excluding appendices) had 4,549 words, 254 commas and 173 words. It took Goldman 40 minutes to read it, write a 579 word response, proofread, get it through compliance, and shoot it to all clients. Now that's efficiency."

What are the Tylers implying?

Fri, 08/31/2012 - 11:13 | 2752761 Ruffcut
Ruffcut's picture

A-Hole talks at J-hole. Better title.

Fri, 08/31/2012 - 11:27 | 2752808 Stackers
Stackers's picture

"Learning by doing" ... aka .... "we have no idea what the fuck we are doing"

Fri, 08/31/2012 - 12:39 | 2753081 Jake88
Jake88's picture

Yeah. That should instill fear.

Fri, 08/31/2012 - 11:27 | 2752810 NotApplicable
NotApplicable's picture

Subtitled: Monetization; Trash to Treasure

(all your unicorn farts are belong to us)

Fri, 08/31/2012 - 11:34 | 2752836 daily bread
daily bread's picture

It's like a girl who says "NO".  You know in your heart she can't really mean it.

Fri, 08/31/2012 - 12:22 | 2753015 Metalredneck
Metalredneck's picture

SO we just keep buying her drinks & stuff.

Fri, 08/31/2012 - 11:02 | 2752709 pkea
pkea's picture

Didn't the GS write  or at the very least co author the bernanke text to begin with?

Fri, 08/31/2012 - 11:11 | 2752751 Vincent Vega
Vincent Vega's picture

Actually GS has their hand up Bernanke's ass.....that's what makes his mouth move.

Fri, 08/31/2012 - 13:20 | 2753217 fireangelmaverick
fireangelmaverick's picture



Fri, 08/31/2012 - 11:09 | 2752739 FL_Conservative
FL_Conservative's picture

Possible impairment of market functioning?  Possible????  Are you fucking kidding me?????  What fucking planet are you on, Bernanke?????  The markets have been fucking IMPAIRED for years now.  What an absolute DUFUS.  And that little shit Hilsenrath needs to be taken behind the woodshed for a long talk with Buford Pusser.



Fri, 08/31/2012 - 10:59 | 2752693 Xibalba
Xibalba's picture

muppet sheep led to the slaughter

Fri, 08/31/2012 - 10:59 | 2752694 SeverinSlade
SeverinSlade's picture

Sorry markit, no mo lsap before elections.

Fri, 08/31/2012 - 11:00 | 2752696 Hippocratic Oaf
Hippocratic Oaf's picture

Goldman's take..........and take and take and take.............

Fri, 08/31/2012 - 11:00 | 2752697 kito
kito's picture

Goldman's Take.....

you mean goldman takes.......everything....from everybody............

Fri, 08/31/2012 - 11:01 | 2752703 SmoothCoolSmoke
SmoothCoolSmoke's picture

SP +14 off overnight lows.  F*ck the Criminal Elite Banksters.

Fri, 08/31/2012 - 11:01 | 2752704 Hype Alert
Hype Alert's picture

It's quite possible the people running this market up have no concern about the consequences of their actions as long as their actions are not impeded.  The current administration has done nothing to stop them, slow them or hinder them in any way.  They may in fact want this administration to continue.  duh.

Fri, 08/31/2012 - 11:02 | 2752708 lolmao500
lolmao500's picture


Aka the bigger total QE is, the least likely they will be able to unwind the positions without crashing the US/World...

IMO this bridge has already been crossed.

Fri, 08/31/2012 - 11:13 | 2752758 flacon
flacon's picture

Bernanke needs to study August 15th, 1971. The USA "temporairly" suspended convertibility into gold. Get it? TEMPORAIRLY. We are still waiting for the NIXON UNWIND motherfuckers! :) LOL! 

Fri, 08/31/2012 - 11:02 | 2752712 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Come on Stolper. Get to work!

Fri, 08/31/2012 - 11:04 | 2752719 BORT
BORT's picture

If I had a nickle for every time I hear "Goldman", "Goldman" would figure out a way to take my nickles

Fri, 08/31/2012 - 11:07 | 2752729 Inthemix96
Inthemix96's picture

Here berankie boy,

Take your bullshit and platitudes for your corrupt fucking imbeciles on wall street and shove them up your four foot arse.  If even 10% of the country knew what the fuck you and your zionists mates were up to, you would be dead by 12pm the night you little fucking parasite.  I relish the day someone strings you up on a light post and burns your filthy little body like the fucking tapeworm on humanity you so surely are.  Your time is running SHORT you fucking theiving, arse wanking complete fucking joke.

Now fuck off and do both humankind and yourself a favour, put a bullet through your jewish zionist head you fucking cunt.

Fri, 08/31/2012 - 11:08 | 2752732 disabledvet
disabledvet's picture

I've been running ccircles around these clowns at Goldman for so long it's amazing they can get out of bed in the morning...let alone claim to have something to say. As was said in the movie Gladiator "did I miss the battle father?" No...Goldman Sachs..."you missed the war." market powers higher...The Bernank has always been a monetarist NOT a Keynesian...and as the CONFIDENCE soars with this realization "so does the market." the policies of 2008 are STILL NOT PRICED the UPSIDE. By all means of course "claim it's all about Apple and short away" of course.

Fri, 08/31/2012 - 11:10 | 2752749 Vagabond
Vagabond's picture

"Ben's prepared remarks went off embargo at 10:00 am Eastern. The text (just the body, excluding appendices) had 4,549 words, 254 commas and 173 words."

173 sentences?

Fri, 08/31/2012 - 11:15 | 2752768 Ozzie
Ozzie's picture

I knew a guy called Bernanke once. He lived on stilnox! Nice bloke. Just had a few sleep walking problems. His parents were children of the great depression. He kept dreaming he was running out of bullets every time he went hunting.

Poor bastard ended up rooting a koala and using paperbark for currency.

Not a unique a story I suppose.....

Fri, 08/31/2012 - 11:19 | 2752781 jjsilver
jjsilver's picture

Goldman is a shareholder in the "private" Federal Reserve Bank

Fri, 08/31/2012 - 11:23 | 2752791 BeetleBailey
BeetleBailey's picture

...but did they count the number of farts he eeked out during his asshole speech...

oh wait..that WAS his asshole.....

carry on..........

Fri, 08/31/2012 - 11:32 | 2752824 ChickenTikka
ChickenTikka's picture

Bernanke didn't ease that, someone else did.

Fri, 08/31/2012 - 11:33 | 2752828 ChickenTikka
ChickenTikka's picture

Bernanke didn't ease that, someone else did.

Fri, 08/31/2012 - 11:36 | 2752841 loveyajimbo
loveyajimbo's picture

Anybody else notice Blankfein under the podium doing a little unconventional easing of Ben Shalom's little kosher cocktail frank?

Fri, 08/31/2012 - 11:47 | 2752896 LongSoupLine
LongSoupLine's picture

wow, it's almost like Goldman wrote the speech for the Bernank, so had the response canned and ready to go...


but that's conspiracy crazy talk.

Fri, 08/31/2012 - 11:57 | 2752923 DaveyJones
DaveyJones's picture

so telling that their meeting place has the word "hole"

Fri, 08/31/2012 - 13:53 | 2753336 monad
monad's picture

Selected to ensure mockery would distract from actual content & activity...

Fri, 08/31/2012 - 11:56 | 2752925 FedBunny
FedBunny's picture

I hate to burst the bubble of those conspiracy theorists who hang out here, but what Goldman did is standard journalistic and legal procedure. It is how things work in the alpha world.  The Bernanke said nothing unexpected, so before the event it is common to have several versions ready to go and then you can fine-tune everything based on the actual wording of what was released. My only inside source is the giant rabbit who is watching me type this from over my shoulder and with his proofreading assistance, I could have done exactly what Goldman did, no conspiracy required.

Fri, 08/31/2012 - 11:58 | 2752937 DaveyJones
DaveyJones's picture

well not exactly everything Goldman did or you'd be rich and speak Greek

Fri, 08/31/2012 - 12:27 | 2753036 FedBunny
FedBunny's picture

One out of two ain't bad.

Fri, 08/31/2012 - 11:58 | 2752936 g3h
g3h's picture

Geeze, Bernanke said he created 2 million jobs.  Obama said he did the same.

Who is to get the credit?

Fri, 08/31/2012 - 11:59 | 2752943 DaveyJones
DaveyJones's picture

better question, exactly who got these jobs?

Fri, 08/31/2012 - 12:47 | 2753103 Haager
Haager's picture

Obama said, Ben didn't do that...

Fri, 08/31/2012 - 11:59 | 2752944 dbTX
dbTX's picture

If at first it doesn't work; try, try again.

Fri, 08/31/2012 - 12:16 | 2752997 de Cosmos
de Cosmos's picture

Sitting on a Rainbow Pushing on a String would be a better title.

Fri, 08/31/2012 - 13:50 | 2753331 Yardfarmer
Yardfarmer's picture

for those who don't necessarily understand this gobbledegook, the simple translation is this: Au $1685, Ag $31.47.

Fri, 08/31/2012 - 16:43 | 2753794 Yen Cross
Yen Cross's picture

   The Chairsatan, has perfected the " reach-around"!  Worthless tool.

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