A lighthearted remark from Reserve Bank governor Glenn Stevens sent the Australian dollar to a three-year low this week.
Prices fell after Stevens said the RBA deliberated for “a very long time”, before deciding the leave the cash rate at its current rate. The market thought the comment was a signal that the RBA would cut rates next month, but deputy governor Philip Lowe said the comment was a light-hearted remark.
If Stevens had kept in mind the famous case of Gerald Ratner, he may have thought twice before joking around. Ratner, a British businessman, sent the value of his firm plummeting after he told a joke at the Institute of Directors in 1991. He was chief executive of successful jewellery chain, Ratners Group.
In the speech, Ratner said, “We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, ‘How can you sell this for such a low price?’ I say, ‘because it's total crap’.” The value of the Ratner group plummeted by around £500 million. This is now referred to as a ‘Ratner effect’.
It’s not just the markets that can take a tumble. Two radio hosts lost their jobs and face possible criminal charges for their April Fools’ joke. Val St. John and Scott Fish from Florida County told their listeners that “dihydrogen monoxide” was coming out of the taps throughout the Fort Myers area – Dihydrogen monoxide, or H2O, is of course nothing but water. Lee County utility officials had to issue a county-wide statement calming the fears of the slightly chemistry-impaired listeners.
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