At last week’s ECB’s press conference, the central bank’s President Mario Draghi was both downbeat and upbeat. As to the former, he acknowledged that Europe’s economy wasn’t working out the way they’d all hoped (and repeatedly promised). Despite the disappointment, Draghi wasn’t completely deterred. This growth scare wasn’t really European, he said. China, trade, and a bunch of other things [...]
Most of the best circuses used to have three main rings. Nowadays, we can only get the occasional show for two on the same day. It is a rare treat when central bankers from two major jurisdictions compete for the world’s misapprehending attention. Today is one of those days: Mario Draghi and the ECB as the warmup act for the [...]
What just happened in Europe? The short answer is T-LTRO. The ECB is getting back to being “accommodative” again. This isn’t what was supposed to be happening at this point in time. Quite the contrary, Europe’s central bank had been expecting to end all its programs and begin normalizing interest rates. The reaction to this new round was immediately negative: [...]
What gets them into trouble is how they just can’t help themselves. Go back one year, to early 2018. Last February it was all-but-assured (in mainstream coverage) that the US economy was going to take off. The bond market, meaning UST’s, was about to be massacred because the overheating boom would force a double shot down its throat. Not only [...]
It is the question nobody ever asks. As soon as contraction happens, the whole thing switches. Central bankers turn their attention, and move the public’s, toward fighting the thing, making sure it is as shallow and short as may be necessary. Officials pay total focus to getting out of it without ever having to answer for how they got into [...]
They staked everything on inflation. In truth, central bankers had no other choice. Having backed themselves into such a narrow corner by doing the same thing over and over and over again, it was only going to be one or the other. Either it worked or for all time they would prove they really have no idea what they were [...]
Germany is a tough one to get around. Argentina falls into a bad recession, you can get by believing that’s not particularly unusual or interesting. If its neighbor Brazil becomes shaky, you can still chalk it up to EM volatility. Italy is Europe’s perpetual basket case. China’s a little more difficult, but still that country has its own unique problems. [...]
Even I’ve become numb over the years to some of the blatant mischaracterizations. Looking at any small positive number for whatever small economic account and declaring it the mark of a strong economy is standard procedure nowadays. But it’s the brazenness with which “they” are now attempting to discount the sudden reappearance of the minuses. I’ve said all along that [...]
It was a tense exchange. When even politicians can sense that there’s trouble brewing, there really is trouble brewing. Typically the last to figure these things out, if parliamentarians are up in arms it already isn’t good, to put it mildly. Well, not quite the last to know, there are always central bankers faithfully pulling up the rear of recognizing [...]
These things are all related, not that they are in any way connected by conventional thoughts on the subject of the global economy. Two European officials are now on record hinting at an ECB “pause.” There is one already underway in the US, Federal Reserve officials past and present debating how long it might last while markets price probabilities for [...]
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