MacroScope

In Jackson Hole, where central bankers and leading economists from around the world are gathering for an annual meeting hosted by the Kansas City Fed, the talk is about the economy, what Fed Chairman Ben Bernanke will signal in his highly anticipated speech on Friday and what Warren Buffett’s purchase of a stake in Bank of America might mean for the beleaguered bank.

Here’s a smattering from interviews on the sidelines of the meeting, which begins in earnest with a formal dinner tonight:

– “QE3 is not in the cards, so don’t expect that,” Bank of America economist Mickey Levy told Reuters Insider, referring to the possibility of a third round of bond-buying by the Fed. Instead, the Fed may aim to reduce long-term rates by replacing some of the shorter-term securities in its portfolio with longer-term assets, he said.

– John Silvia, an economist at Wells Fargo Securities, said such a step would be a “small move,” and suggested that with three dissenting votes on the Fed’s policy-setting panel Bernanke would be more likely to go slow than fast. “Three dissents do matter,” he said.

– Carnegie Mellon professor and Fed historian Alan Meltzer, who has attended nearly every annual Jackson Hole meeting since its inception 29 years ago, suggested there’s about as little Bernanke can do about the economy as about the torrential downpour that drenched the mountain valley minutes before his interview.

“Look, I’ve done what I can,” he advised Bernanke to tell his audience. “There are other things that can be done, but they’re not things that I have to do.” Meltzer said the United States does not look to be headed back toward recession, but growth will be slow.

– In an interview earlier with Reuters, the meeting’s host, Kansas City Fed President Thomas Hoenig, also discounted the likelihood of a recession and, as he has time and time again, argued that Bernanke should stop trying to cut rates to avoid sowing the seeds of inflation.

– Camden Fine, president of the Independent Community Bankers of America, said Buffett’s $5 billion investment in Bank of America shows the bank must have been in “serious trouble.”

“I’d love to know what Warren Buffett is getting out of this… [S]everal pints of (Bank of America Chief Executive Brian) Moynihan’s blood I would imagine. But beyond that there is so much uncertainty: economic uncertainty, tax uncertainty, accounting uncertainty… I think it’s a gamble for Warren Buffett.”

Photo: A stuffed grizzly bear stands next to a sign in the lobby of Jackson Lake Lodge, the site of the Jackson Hole Economic Symposium in Grand Teton National Park, August 27, 2010. REUTERS/Price Chambers