Mario meets Spinal Tap

Not only is he a man who does not seem to understand how banks actually, not only is he dominated with the idée fixé of his blessed inflation mandate instead of paying more regard to what his institution should—and more importantly—should not do as a contribution to the material well-being of those under its sway, but dear old Mario is clearly no kind of a psychologist, into the bargain. Continue reading

What WILL it Take?

In the midst of all the recent uproar, one anonymous Twitterer seized his chance to have his Uber-Warholian, 140-characters-of-fame moment and thundered: ‘Central banks are losing control of this market!’ no doubt eliciting whatever the social media equivalent of a cry of ‘Hear! Hear!’ and an approbatory nodding of the head might be from among his followers. Continue reading

Madness in the Method

Seemingly oblivious to the idea of ‘purdah’ – a period of dignified silence to be observed in the run up to the taking of policy decisions—the ECB’s Chief Economist, Peter Praet, felt able to give AFP a wide-ranging interview this week and truly remarkable it was, too.

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Memo to Mario: Money is fungible

Since the spring of 2014, the euro has lost around a quarter of its value, Mario Draghi has finally joined the Big Boy’s League by launching his own, decidedly belated version of QE, and—everywhere but in poor, benighted Greece—the growth of the money supply has been bordering on the explosive. Continue reading

Athens(es) of the North

In order to give some context to the disparities which so bedevil relations between countries in the Eurozone, one thing we can consider is the tally of net private indebtedness to banks (i.e., the sum of household and private, non-financial corporation loan balances less their deposits). To make these truly comparable, we take into account both the size of the population (ranging from Germany’s 80-odd million to Ireland’s 4 1/2) and also Eurostat’s estimate of median household income. We also take the opportunity to widen out the snapshot so as to include the Eurozone’s Scandinavian fellow-travellers in Sweden and Denmark.

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Timeo Danaos (et Romanos)

It is now largely overlooked, but the 19th century had its own precursor to EMU in the shape of the Latin Monetary Union, set up principally to try to solve the hoary problems of silver:gold bimetallism. But, if much of the Union’s history was dogged by the narrow technical issues of how, firstly, to structure its members’ own monetary system and, thereafter, to align it more closely with those of the non-members, there were other features, too, which are still very much germane today.

Unrealistic expectations, short-term politics, and – as ever – too much debt plagued both Greece and Italy in those days, too, with repercussions for the other LMU members as well as for their trading partners in the wider world.

[The following appears as Chapter II in my book ‘Santayana’s Curse’ available on Kindle]

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ECB Excesses

With last week’s report of monetary developments in the Eurozone, we again have evidence both of Draghi’s monetary monomania and of the sheer futility of his constant refrain that the ECB is just buying time until member states undertake the ever-promised, but never-delivered ‘structural reforms’ which they all so patently require.

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Monday Morning Macro

Though the punditocracy has become much more aware of the sheer scale of China’s equity bubble in recent weeks, it is still arguably the case that reality is running ahead of reportage even as more and more evidence emerges of just how dire things are in the world beyond the brokerage screens.

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Mario Draghi – Prime Broker to the Universe

When even the eminent lawyer, Christine Lagarde, interrrupts her incessant calls for more ‘stimulus’ to confess that yes, peut-être, we ought to be on the look out for a bubble or two, you know things have reached a pretty pass.

In truth, the awful effects of monetary overkill on the part of the major central banks seems finally to have reached a critical juncture, with asset markets everywhere spiralling rapidly out of control. We can only shudder to think what will await us if the inflationary spark ever manages to jump the firebreak of bad banks, zombiefied overcapacity, and ruined balance sheets and sets light to the markets for goods and services, too.

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