Don't Panic
"Don’t panic, don’t panic Mr Mainwaring" said Corporal Jones as he rushed around in circles. Residents of Walmington-on-Sea had besieged the church hall complaining they could not afford to buy butter. Captain Mainwaring looked down his nose and said "If there’s one thing I’ve learned in life, Jones, it’s never to panic." Then he announced that from today people would need just three and a half coupons to buy half a pound of butter instead of four and a quarter. It was the biggest boost to rations since the war began.
Sixty five years on the successor to the Dad’s Army bank manager, the bearded chairman of the US Federal Reserve Board Ben Bernanke, wasn’t panicking either when he slashed US interest rates on Tuesday by three quarters of a percentage point from 4.25% to 3.5%. It was the biggest cut since 1984. And he did it a week before his Board was due to meet to decide whether rates should be cut or not. But panic? Never.
He was simply reacting after stock markets around the world suffered their biggest fall since the terrorist attack on New York and Washington on 11 September 2001. Then the Fed cut rates by half a percentage point, though more followed. Tuesday’s cut was bigger. But it wasn’t a panic.
Dealers in the City of London said they had never seen anything like it. Ever. And they had been there in 2001 – and some in 1984 as well. But they stressed they were not in a panic. Oh no. Just looking for buying opportunities.
BBC Business Editor Robert Peston said "If it looks like a panic, and it quacks like a panic, then it is a panic." OK he was mixing up his metaphor. But, hey, he was busy not panicking too!
Ben Bernanke is charged with fighting off recession. Like Captain Mainwaring he knows who his enemy is but he doesn’t know where it lurks. And he only has one rusting weapon in his locker. Interest rates. For ten years slight shifts on the tiller that put interest rates up and down a quarter point at a time succeeded in keeping the USS Economy on an even keel. But now strange new currents are buffeting the ship. It is going slower and slower for no apparent reason. He can see a lot more boats on the sea, some sailing so fast they may one day overtake him. Moving the tiller gently from side to side is no longer achieving the steady progress it once did. But he has no other controls. So he gives it one big triple yank hoping that might do the trick. Without panicking of course.
Mr Mainwaring would be proud. Even as he muttered "Stupid boy."
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