Federal Reserve Chairman Ben Bernanke took to his podium on Wednesday, but what he said was nothing much new. Quantitative easing -- the bond-buying program pumping billions of dollars into the economy -- would continue, for now.
Investors reacted in a big way; the Dow Jones Industrial Average suffered its worst loss of the year.
"I think Wall Street overreacted," said Bloomberg Government's Nela Richardson. "It was almost as if Bernanke punched Wall Street in the collective gut, and that's not what his intention was. He said -- very clearly, I thought -- that the Fed would begin to taper if -- and only if -- the fundamentals looked good. Not good enough, 'good.'"
"I agree, but I also think he muddled the message," FT Alphaville's Cardiff Garcia said. "I took away two main things, once you cut through all the clutter. One is that he really does expect the economy to improve, even more than he expected it months ago. And because of that, that's why he thinks it's appropriate to start slowing down the pace at which the Fed supports the economy later this year. But he made another point, as Nela said, which is if it doesn't meet his expectations, then he's willing to adjust the pace at which he either slows down, or if it gets really bad, he'll even increase it. The problem is, the markets completely ignored the second point."
For more on Bernanke, listen to the full audio above.
The Wrappers offer their picks for reading on this first weekend of summer.
Cardiff Garcia chose:
- An overview of the science behind how our brains process information that contradicts our existing beliefs.
- Martin Wolf on how austerity has failed in the eurozone and the U.K.
- A profile of Booz Allen, "the world's most profitable spy organization."
Nela Richardson picked:
- Stephen Marche has a nice take on the "Can women have it all?" debate that includes fathers too. It's not just about gender politics, economics matters as well.
- Fareed Zakaria proposes ways to Restore the American Dream. Unfortunately, some of them require a functional Congress, maybe one day...
- Jill Lepore writes about the history of privacy and the paradox of a culture obsessed with both privacy and publicity.