The economics of clarity…

In an article exploring the heavily analysed utterances of central bankers, CNBC’s UK business editor Helia Ebrahimi highlights the importance and trickiness of “making words perform the exact meaning one wants”.

Yes, words are slippery eels, especially when it comes to trying to synch what you want to get across with what people understand by what you say. Just what does Mario Draghi mean by “whatever it takes”? The phrase gains different currency as, for example, events in Greece unfold, and these events in turn are open to multiple interpretations.

Meanings, like markets, move. But that does not create a get-out clause for clarity. Helia Ebrahimi quotes former US Fed chairman Alan Greenspan: “If I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” A neat turn of phrase, but one which makes light of always striving to be clear no matter how complex the issues.

After all, a little more clarity back in 2007/8 could well have meant a lot less crisis.