Ben Bernanke has always reminded us of Eeyore, Winnie the Pooh's donkey friend. He's got that grayish coloring, and those sleepy eyes, and he looks a bit patched together, as though he were lovingly restitched after being worn out by President Bush and the financial crisis. And then of course there's his view of the economy, which has been cloudy since the crash. Even on the rare occasions the Fed Chairman allows a bright note to sneak into his semiannual monetary policy report to Congress, he immediately tones it down, as though he doesn't want anyone to get too excited because there could be some kind of cataclysm any second now. That's what he did today. After cautiously noting, "My colleagues on the Federal Open Market Committee (FOMC) and I expect continued moderate growth, a gradual decline in the unemployment rate, and subdued inflation over the next several years," he went ahead and dropped this bomb:
Of course, even as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain.
After his remarks, the market tanked. But at least there hasn't been an earthquake.