While politicians anxiously check the shifting weather-vanes of public opinion and scientists squabble over facts as well as interpretations, central banks are resolutely doing what they do best – wildly exceeding their briefs and trying to drown all problems in a flood of newly-created money. As ever, the underconsumptionists worry that a lack of demand will usher in deflation, in spite of all such efforts. Some of us, however, worry more about what it will do to supply. Here, we explain why [For those who would like a podcast version please follow this LINK]:-
Category Archives: ECB
Whatever it doesn’t take
On March 15th, the Eurozone branch of the Throw-more-money-at-it lobby were making themselves heard, calling for the ECB to run the printing presses for a limited (author pulls down lower eyelid with index finger) period as a supplement to the to the €120 billion in extra security purchases already made to that point. [NB total ‘assistance’ to April 17th had reached to €275bln in RP, €148bln in securities, and €126bln in FX swaps for a total of €550bln in five short weeks].We responded:-
Utterly Negative
Mario Draghi emerged last week from the much-awaited meeting of the ECB Governing Council meeting clutching a fairly bland official communiqué which extended the envisaged freeze on interest rates out to the latter part of next year (aka, ‘forward guidance’), pledged that there would be no shrinkage of the Bank’s securities portfolio (so-called ‘quantitative tightening’) for some considerable period after that ended, and gave details of the terms on which the next batch of loan socialization can be refinanced under the aegis of its TLTRO III programme. [First Published June 7th] Continue reading
China Banking: Pigs Might Fly
There must be something in the air this winter – something that is besides the whiff of climate cant and manufactured eco-hysteria emanating from Davos and all the other organs of bien pensanterie. For, everywhere you look, someone is going less than quietly insane, either cooking up or Swedish chef rehashing glaring errors of economic idiocy or sweet-shop window socialism. Bork, bork, bork!
[This article can be heard as a podcast on Soundcloud under ‘CantillonCH‘ or iTunes under ‘Cantillon Effects‘] Continue reading
Central Banking: It’s alive!!
In his recent posting on Linked In, entitled, ‘The death of macro-prudential’, Stuart Trow of the EBRD delivered a well-aimed broadside at the pitiable conduct of the Bank of England and elaborated on some of the malign consequences of its catalogue of errors. Without wishing to single him out unduly for criticism for a piece with whose broad outlines I concur, I see it as a prime example of where even those who are not wholly in thrall to the cult of ‘Whatever it Takes’ often miss the critical features of that cult’s essential evil. Continue reading
Trade Wars: Blue-on-Blue
The so-called ‘war’ over trade being conducted by the US & China has given rise to much ill-informed commentary about its supposed benefits, its prospective victims, and China’s putative responses. Continue reading
The Turn of the Tide
Have we finally reached the high-water mark of the current bull run? Is all the good news in – and the last, most shaky, marginal buyer along with it, inveigled in by the bounce from February’s brief Vol-au-Vent? If so, what are the implications? Where are the trigger points? How will any weakness manifest itself? Continue reading
How the VIX Seller Lost his Shirt (updated)
Previously featured by the good folk at Real Vision, my look at how the narrative we construct around the events of the market is all important in determining how we react to it and, hence, what further ramifications these might involve.
Pump’n’Dump
One of the prevailing stories which nervous market participants whisper to each other at bedtime involves the timely appearance of the Fairy God-mother, hastening to Earth from Tir Nan Og to launch another multi-trillion round of money-printing the instant that our over-inflated asset prices suffer any meaningful setback. This comforting narrative, however, presupposes three key elements…
Where’s the Off Switch?
In our latest piece we look at the ECB’s overkill and all manner of possible over-valuations at work in different markets around the world – the two not being entirely unconnected, the reader might note! Continue reading