Great communications achieves cut-through. You hear a phrase that you immediately understand and remember - and it epitomises the issue at hand.
Warren Buffett - the Oracle of Omaha - has a wonderful way with words. He’s been tested in his most recent shareholder letter when trying to explain the devastation wrought by the global financial collapse. Buffett says of 2008:
By year end investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.
No confusing that imagery. And yes, I feel much like a battered sparrow. Who doesn’t?
But what chills the blood is Buffett’s description of the government’s response:
In poker terms, the Treasury and the Fed have gone ‘all in’.
That doesn’t leave any room for maneourvre, does it?
In Australia the government has kept a few spare chips in reserve. The Reserve Bank of Australia chose not to lower interest rates at today’s meeting. That means there’s a little more flexibility for future changes. And Prime Minister Kevin Rudd has rushed AU$42 billion in aid out. But that’s billion with a “b” and not like the $1 trillion now being laid out in America. (Cut to Dr Evil in Austin Powers who exits a time machine and decides, in the 1990’s, to blackmail the world for $1 million. What comes after trillion? Gazillion?)
But back to bloodied birds. If you’re trying to make sense of the global financial collapse then look no further than Warren Buffett’s letter to shareholders. It’s plain, understandable and damn sobering.
