- Volatility soared as equities lost more traction in August, falling into negative territory for the year.
- Fears of recession, along with the perpetuation of the Eurozone crisis, prodded a flight to quality that resulted in falling Treasury yields and positive returns for high-quality bonds for the month.
- Inflation accelerated in July but remained in a moderate range over the last year. Bernanke’s speech at Jackson Hole stated that the Fed would take action as necessary but delivered no assurance of additional easing in the near term.
- The employment situation once again disappointed with zero jobs added in the month of August. The unemployment rate remained a high but steady 9.1%.
The Law of the Instrument…
In 1964, the American philosopher Abraham Kaplan introduced a concept he called the Law of the Instrument: “Give a small boy a hammer, and he will find that everything he encounters needs pounding.” Just a few years later, “The Psychology of Science: A Reconnaissance” was published by Abraham Maslow, a professor of psychology. In it, he referenced the more common version of this notion, popularly phrased, “If all you have is a hammer, everything looks like a nail.” Why this brief foray into psychology? Although the hammer and the nail analogy could be a fitting intro into discussions of the still-ailing housing market, this idiom also provides a fitting depiction for the major problem facing policymakers today.