"An actuary is someone who found a career in accounting too exciting" Anon.
But it makes me wonder who chooses a career in central banking when you can become an actuary?
It is a sign of our times that pretty much everything has become so glamorized, requiring personality cults to emerge in the most unlikely of corners, including central banks. This amazes and amuses me on several levels not the least because central banking is, all things told, one of the dullest things a person can do with their lives.
If you believe the press, we now have the full gamut of superstar central bankers - Ben Bernanke (at the US Federal Reserve), Mario Draghi (European Central Bank), Mark Carney (Bank of England) amongst the Western nations and Haruhiko Kuroda
(Bank of Japan) amongst the rest. With loads of irony, I had named Draghi ''man of the year'' in 2012 and Kuroda is worthy of ''man of the year'' in 2013 for the manner in which the two gentlemen turned on the currency printing presses to save their respective economies and hence the world.
The developing world hasn't had many banking superstars, but recently India named Raghuram Rajan as the new head of the Reserve Bank of India, starting at the beginning of September.
The appointment of Rajan has particularly excited the financial media and also the Internet. With the Indian rupee tanking like the medical condition of one of that country's gang-rape victims, the thought is that Rajan would take charge and reverse the decline. He is famous for the 2005 call that predicted the financial crisis, quite specifically emanating from the very financial instruments that then Federal Reserve chairman Alan Greenspan and company had termed perfect instruments of risk transfers.
Adding irony to the appointment of Rajan as India's head central banker comes the possibility that he might soon be sparring against Larry Summers as head of the Fed when the US president makes his choice at some point, having publicly fired incumbent Bernanke over the summer break.
Summers was the one who, at the same 2005 enclave of central bankers and senior economists at the annual Jackson Hole, Wyoming conference that Rajan made his crisis prediction, accused Rajan of being a ''Luddite'' and out of touch with modern banking. With plenty of egg on Summers' face from that encounter, it will be interesting to see how credible the market thinks the US dollar is, especially if he were to be dragged into another battle with Rajan (which is inevitable).
Tough as it may be to imagine, these are the kind of things affecting global economic confidence. Somehow, the market seems to want gladiatorial contests between such superstars to whet its appetite or to provide justifications for taking investment decisions in what are essentially random walks in currency movements.
So how exactly does one become a central banker?
Before you start - and that phrase itself tells you a lot, namely that central banking is full of logical flip-flops, seeing as you cannot technically be doing anything before you ''start'', but nevertheless that never stops anyone from mentioning this - there is the job interview. To get there, you need to have studied economics at some major university and published a bunch of papers usually on subjects like the ''Civilizational and monetary implications of using broken pottery shards as currency in ancient Mesopotamia'' or some such.
As for the job interview, imagine if you can the four dullest people you've ever met. Then imagine all four of them on a panel in front of you asking you technical questions for two hours. Not one of them will smile and not one of them will have any sense of humor.
Much of this interview will be about the papers you have published, with a specific focus on methodology. The trick to passing the interview is to figure out which of the four luminaries in front of you is the actual decision-maker (or swing vote that at least two out of the other three will not dare cross because, for example, he is on the central bank promotion committee) and then, agree that his critique of your paper is correct and how you'd like to work for him to make sure that your learning is completed. Job done - or at least, job secured.
Then starts the actual job.
First there is the data analysis. You're talking here of pouring over millions of rows in Microsoft Excel or Microsoft Access to glean nuggets about inflation, asset prices, money supply and bank lending. You might have a spike in pork prices one quarter that could take all policy attention for the period (eg China) or a decline in mortgage approvals that could spell a sharp downward revision to growth expectations (eg the United States).
As a low level data functionary though, you'd hardly ever get the respect that such drudgery deserves. Once you try to present your findings, you will be reminded of the correct ''format'' to present these. Typically, this would be stolen from some peer-reviewed research publications necessitating the copious use of useless math - yes, somehow central banks are the only places in the world where the math used is actually useless.
This is also the stage when three other people will add their names to your report. These three will have particular contributions - one will correct the punctuation in your report, the other will format the paragraphs just right, and the third will pick out the one spelling error (seeing as Word doesn't distinguish between a ''bare market'' and a ''bear market''). Yes, it's time for your bosses to add their weight to the report. Your name by then will be a footnote.
Once you're high enough in the organization to have your name at the top of the report, vicious politics start. All your previous publications will be reviewed by your peers - namely, the same chaps vying for a place at the top - and all kinds of accusations will flow from those. Its easy for the same paper to be attacked as evidence of the author being a closet Marxist or Keynesian or from the Chicago school.
The one thing you do not want to be accused of though, if you actually value your promotion, is to be accused of being an Austrian school economist. That's a death knell for your career right there, and the day it happens, do resign and go off to the private sector - namely to one of the global investment banks which will hire you as their ''Economist'' and parade you around as being from that central bank or this.
Being a Marxist, Keynesian or adherent of the Chicago school would then determine how far you get ahead. It is important though to make sure that your immediate superior (and I use that term loosely) is from an opposing school and that HIS superior is from your school. Then, your immediate superior can never fire you and has to tolerate your views because he wants to be seen to be open-minded.
This will go on for over 20 years until you become a department head of some sort. If you are very political, it is best to be the department head of something innocuous, such as currency design.
Only if you are actually competent should you take on something like banking supervision because that involves actual work. That's the reason this particular job is usually given particularly in the good years to the ''men who lunch'' - the job involves nothing more than being wined and dined by senior bankers amongst those being supervised by you. And if you happen to be in the central bank of certain countries (eg those in Southern Europe), there are other perks like holiday villas and ski vacations. Then, when all hell breaks loose - every five years now - a person with actual credentials will be put in the job and try to reverse all the dispensations granted by the previous incumbent.
Assuming that you were on the rate-setting committee for a bit of time, you will be up for promotion to the top job. That is when the REAL politics starts - in this case, involvement with the actual politicians running your country. If you are American, you face a senate process and some very public flogging; if you are from the UK, a very secret Treasury process and so on.
Read above the paragraph on which ''school'' you belong to: this is the point of time when you have to prove that you don't actually subscribe to any particular school but that you are ready to take head on the particular challenge of the day. The sub-text is, you are willing and eager to take on the specific challenge of the day in the way that the political party sponsoring you wants you to.
Right about this time, some chap recommended by Goldman Sachs will come in and take the top job and you will be left where you started as a second horse in a one-horse race. The chap recommended by Goldman Sachs will have the following qualities: (a) A full head of hair (b) Policy ideas (c) Dashing good looks
Okay, usually (a) and (c), so two out of three isn't bad.
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