By James Saft
The risk in all transitions is a destabilising void, and at this year's Jackson Hole Federal Reserve conference a policy void is leading the agenda.
Despite this being the eve of what may be the most important rollback of monetary policy ever, Ben Bernanke has passed on the chance to make a valedictory address. This marks first time a sitting Federal Reserve chairman has missed the event since 1987, when Alan Greenspan stayed home just days after being confirmed by Congress for the job.
The event, organised annually by the Kansas City Fed at the mountain resort in Wyoming, has long been not just a place to exchange ideas but the backdrop for preparing the markets and investors for important changes in policy.
This year, not so much. Besides Bernanke, Mario Draghi of the European Central Bank won't be there. Nor will Mark Carney, newly installed at the Bank of England.
Larry Summers, widely seen as the front-runner to replace Bernanke when he leaves office at the end of January, is also elsewhere engaged. Only three of the seven members of the Fed board of governors are coming.
Do you get the feeling that central bankers would rather not talk just now about how policy is going and what they plan to do next? That in itself is unsettling, especially given the two huge transitions we may shortly face: from bond buying to less bond buying and from Bernanke to whoever comes next.
Janet Yellen, Summers' main rival for the job, will be there, which given that the cool kids are staying home may tell you as much about her chances as the fact that the list of White House interns this summer includes one Harry Summers, son of Larry.
I suppose it is possible that Bernanke, or even Summers, surprises us all, perhaps by parachuting, James Bond-style, from a helicopter Friday morning to unveil QE 2.95. But let's not count on it.
And while the Bank of Japan's Haruhiko Kuroda and Charles Bean from the Bank of England will be there, the fact remains that though there are pressing questions about monetary policy in both countries, the real action is going to come out of the United States.
We will very likely end the weekend having considered a series of interesting ideas, but fundamentally none the wiser about the big questions.
In some ways it is understandable that policymakers are shying away from a public exchange of views. There is remarkably little consensus about the economy, financial markets or how best to calibrate policy to best influence them.
The markets came away from the Wednesday release of the Fed minutes from their last meeting in July with the impression that September would be the month when the central bank begins to shave back its bond purchases. Both bonds and stocks fell after the release, though not nearly as much as they will if it actually happens.
The minutes show agreement that tapering would be right "if economic conditions improved broadly as expected." Just about now, however, with the exception of an improving unemployment rate, economic conditions can't be construed as strong. Indeed, they are a bit weaker than the Fed has been forecasting.
There are very good reasons to start tapering simply because our understanding of the benefits and risks of bond buying is so limited. That, however, is not a paper we can expect to be delivered in the mountains this weekend.
There is, quite simply, lots of disagreement. One member of the FOMC dissented and called for a more explicit commitment to taper soon. But "a few" members urged patience and the need to evaluate more data as it comes through.
As well, "a number" expect second-half growth to disappoint, which surely must argue for holding back on the taper.
At this point, it is hard to know what to expect. The Fed might well taper in September just to show that it can, or it might decide to sit the whole thing out and leave it in the lap of the new chief, whoever that person is and whenever they are approved.
In some ways, the chances of a slow or uncertain approval process might argue for doing a little now, just to take the drama off of the table. The problem with that is that markets may react so severely to the taper, in the U.S. and elsewhere, as to force the Fed to somehow hose investors down.
Perhaps Wednesday's selloff can best be seen as a reaction to that old bugbear uncertainty.
Don't expect the Jackson Hole conference to provide any help.
James Saft is a Reuters columnist. The opinions expressed are his own.
Reuters