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
Negative rates, Negative Outcomes
There has been much head-scratching of late as to why, with interest rates lower than they have been since the Universe first exploded out of the Void, businesses are not undertaking any where near as much investment as that hoped for beforehand by the academic cabal whose ‘effective demand’ and ‘transmission channel’ fixations have helped drive rates to today’s mind-boggling levels.
The Ballad of Alpha, the Bull’s Bull, All Geared
With all due credit to the great Irish songwriter Percy French for his comic ditty (tune here) which originally concerned the (once more horribly pertinent!) conflict between the Tsar and the Ottomans – one familiar to all true rugby fans in a decidedly more ribald version. When this was first published in the last days of 2007, it was offered as piece of seasonal levity regarding the dire state of financial markets which were already giving undeniable indications that the drama through which we were all living was headed to a very operatic denouement indeed.
Manufacturing matters
Much predictably fatuous comment has been devoted to the fact that, to the extent that the US is facing any difficulties at all outside the oil patch, at present these ‘only’ affect manufacturing—a sector which , as any fool knows, accounts for a mere 12% of GDP. Ergo, we are told, while employment in general holds up and consumer spending is maintained, a recession is not to be countenanced—a bill of clean health which conveniently supports the sell-side’s fingers-crossed contention that stocks are cheap and that credit is beginning to offer up real bargains for the man brave enough to dip his toe back into the waters. Continue reading
Canaries in the Coalmine
The old Wall St. adage runs that ‘stocks are not bought, they are sold’, but the idea here is that they are sold to eager acquirers and that the act of selling does not therefore depress the price too much. The same cannot be said of what we have experienced these past six weeks or so.
If the damage in the major indices—measured from the early December highs—has so far been limited to a ‘corrective’ 10%, others—whether geographically more far-flung or more sector-specific—have not been so fortunate. Continue reading
The Three Kings (and One Queen)
Please read on for a little light Christmas cheer, with apologies to the spirit of Henry Wadsworth Longfellow.
Has the Fed ‘Bought the Farm’?
Those of us who have not been stuck on Mars for the past five years, tending our potato patch, will be dimly aware that the Grand Mages of the economic world – the central bankers – have been manfully searching their spell-books and bubbling their alembics in order to exorcise the dreaded demon of Deflation from the land, terrified that the world will collapse around them if too many shoppers are too routinely confronted with anything that might smack of being a bargain. Continue reading
Hocus Pocus
We are in danger of being blinded by semiotics and so losing sight of substance. We are so convinced that the medium IS the message that we have forgotten to seek for the meaning it is supposed to convey. We have given in to the quack doctors and their unscientific theories of humours in the body economic. We are now so anxious to keep the patient’s temperature minutely regulated that we have neglected to do anything about the malarial parasite which had earlier given him a fever and now has him shivering through a chill.
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.