Jay Leno loves to call attention to the general dimwittedness of the average person walking on the street with his hilarious “Jay Walking” interviews. He asks everyday people questions about current events or basic knowledge any first grader should know. Usually, they stare back and give uproariously goofy answers.
My favorite exchange was Leno: “What river separates the United States from Canada?” Answer: “The Rio Grande” of course.
“We should feel confident about Alan Greenspan’s successor.”
While general dimwittedness might be okay, it’s not a sign of good management. For example, here’s a question that is truly difficult to answer and would elicit debate among the most intelligent among us:
Who is the most important political figure in the world? The President of the United States? The Secretary-General of the United Nations?
The Chairman of the Federal Reserve Bank gets my vote. No single individual has a greater impact on the global economy, directly affecting our businesses and profits. His decisions at the Central Bank globally impact interest rates, stock prices, and the U.S. Dollar. His advice influences tax policy and government programs.
It’s a timely question for you to consider as you plant for business this year.
Alan Greenspan has retired after more than 18 years at the helm of this institution, leading our economy through an unprecedented era of low inflation and unparalleled growth. Putting politics aside, it was Greenspan’s policy, combined with economic expansion and globalization of the world markets, that ushered in a decade of economic prosperity in the 1990s.
This was also the era when we experienced the largest percentage growth in total U.S. ready-mixed concrete production of any decade since we tracked this statistic.
So Mr. Greenspan has retired with a well-deserved reputation as the greatest Fed Chairman ever. Theses are big shoes for his successor, Ben Bernanke, to fill. But I’m enthusiastic about this change and its potential impact on the concrete industry.
Will Bernanke’s reign be different? Beyond his very vocal commitment to Greenspan’s Fed policy, he seems to be singing a very different tune that clearly will benefit us. He is signaling greater transparency in how the Board decides interest rate changes.
Greenspan’s methods were cloaked in secrecy, with very little public discussion about how the Fed was setting policy. As evidenced in the last string of ¼-point rate increases, the Fed only recently has begun to be more transparent in its decision making.
This is important to business, whether we produce concrete, extract construction aggregates, build houses, or make widgets. In this last round of well-publicized rate increases, we were able to plan for the rate hikes, a development that may have been the single biggest factor in driving the housing boom. The public reacted with, “rates are going up, so it’s time to buy.”
Now Bernanke is hinting the Fed will set a more visible target on inflation, possibly in the range of 1% to 2% for the core rate, which excludes volatile food and energy prices. This will make it much easier for the business world to track and react to underlying economic conditions. If inflation moves above or below that range, smart decision-makers in our industry will plan accordingly.
So, farewell, Mr. Greenspan, and thanks for the prosperity you brought to our industry. And welcome, Mr. Bernanke. We look forward to the greater transparency.
Pierre Villere is President and Managing Partner of Allen-Villere Partners. Contact Pierre Villere at firstname.lastname@example.org or telephone 985-727-4310.
© 2006 Hanley Wood, LLC. All Rights Reserved. Republication or dissemination of “Farewell, Mr. Chairman” (The Concrete Producer, February 2006) is expressly prohibited without the written permission of Hanley Wood, LLC. Unauthorized use is prohibited. Allen-Villere is publishing “Farewell, Mr. Chairman” under license from Hanley Wood, LLC.