Ben Bernanke a no-show? No matter

Scenes from a gathering of central bankers

JACKSON HOLE, Wyo. – Ben Bernanke is a no-show. No matter. Despite the absence of the Federal Reserve chairman, this year’s annual economic conference in Jackson Hole has once again proved a destination of choice for central bankers.

In international banking circles, the Jackson Hole gathering, held each August in a rustic lodge in Grand Teton National Park, is akin to Academy Awards night. If you’re invited, the message is clear: You’re someone who matters.

This is the first year in more than two decades that a Fed chief hasn’t given the keynote speech to open the conference, which began Friday and ends Saturday evening. News last spring that Bernanke would skip this year’s conference was taken as a signal that he’ll leave the Fed when his term ends in January.

With speculation intensifying over his successor, a spotlight has fallen on Fed Vice Chair Janet Yellen, one of two leading contenders. Yellen is here. Her chief rival, former Treasury Secretary Larry Summers, is not.

Yellen is among 10 members of the 19-member Federal Open Market Committee in attendance. The FOMC comprises the Fed board members and regional bank presidents who set the central bank’s interest-rate policies.

Central bankers from every major economy, from Germany and Britain to Japan and China, are here. So are those of smaller nations from Albania to Malta.

Among the 130 guests are many scholars of economic policy. They’re joined by top economists from financial firms — at least those who managed to score an invite.

Attendees spend hours in a windowless conference room hearing and discussing presentations of academic research. They do get afternoons off — to hike, go rafting or take bus tours. But even against the backdrop of majestic mountain grandeur, many of the Ph.D. scholars have been known to go right on debating economics through the day.


This year’s papers are grouped around a theme — “Global Dimensions of Unconventional Monetary Policy.” Given the turbulence in emerging markets and speculation over the Fed’s rate policies, the topic seems especially timely.

Led by the Fed, the world’s major central banks have driven rates to near-record lows. They’ve also pursued a range of unconventional steps to try to help the global economy recover from a financial crisis and the worst recession since the Great Depression.

As the conference program introduction notes, success has been uneven. Unemployment remains abnormally high, for example, in nations such as Spain (26 per cent) and Portugal (17 per cent). And finance officials in developing economies from India to Indonesia and Turkey have recently come under enormous pressure: They’re scrambling to halt sharp declines in the value of their currencies and keep foreign investors from pulling their money out.

A big factor in their concern is that the Fed will soon act to increase U.S. interest rates and cause money to shift into U.S. Treasury securities.


One issue not on the agenda but a hot topic at the edges of the conference: The campaigns waged by supporters of Yellen and Summers to secure the nomination of their candidate. From the use of Twitter and opinion columns to behind-the-scenes lobbying and letters signed by Senate Democrats, the battle to influence the president’s mind has been raging.

Fed officials here have been careful not to take sides in the contest, at least not publicly. They do agree on this: They’ve not seen anything quite like this summer’s public jousting.

Dennis Lockhart, head of the Atlanta regional Fed bank, called it unprecedented. But he said the jockeying over the chairman’s job is having no effect on the Fed’s policymaking.

“The chairman’s leadership is as strong as it has ever been,” Lockhart said in an interview Friday on CNBC.

He was addressing concerns that the prolonged contest to Bernanke might weaken his influence as chairman by solidifying the perception that he’s a lame duck.

In an interview with CNBC , James Bullard, head of the St. Louis Federal Reserve Bank, noted that a change in the Fed chairmanship has been fairly unusual since World War II. Bernanke has served for nearly eight years. Two of his predecessors — William McChesney Martin (1951-1970) and Alan Greenspan (1987-2006) — served for a combined nearly four decades.

As for whom he would prefer as chairman, Yellen or Summers, Bullard struck a diplomatic note.

They’re both “great economists,” he said.


At the opening dinner Thursday night, Esther George, who as head of the Kansas City regional Fed bank is the conference host, had some fun with the topic of Bernanke’s absence.

“Sometimes,” George said in her welcoming remarks, “those who regularly attend are not able to make it. We make it a practice never to talk about those who turn us down.”

“Despite my personal disappointment,” she went on, she’d be happy to welcome back Ken Rogoff for future conferences.

Her mention of Rogoff, a well-known Harvard economist, rather than Bernanke, drew laughter from the audience.

Call it economists’ humour.