Words ought to be a little wild, for they are the assault of thoughts on the unthinking
- J.M. Keynes

Friday, 13 April 2012

Post vacation flippancy


Got back from Easter holidays and I'm glad to see that the circus is as entertaining as ever.

Yesterday brought this gem (more on which in another post):
*ECB'S PRAET `WORRIED' BY STATE OF U.S. PUBLIC FINANCES

Praet is talking about what Bernard Woolley would call an irregular verb: 'I have a temporary liquidity problem, you have a debt crisis, he is insolvent.'

Today seemed humdrum until it was Knot (sorry).

*ECB'S KNOT SAYS 'VERY FAR' FROM RESUMING GOVT BONDS BUYING

As hopes were being pinned on the SMP to ride to the rescue, this is Knot (sorry again) what the long and wrong crowd wanted to hear.

Before we could think that all is Knot lost (sorry it is impossible to resist), surely policy accomodation will continue, came the next headline:

*ECB'S KNOT DOESN'T EXPECT 3RD LTRO IS NEEDED        

Thankfully he didn't say rates are too low.

The reason why we don't need any of this was soon made clear:

*ECB'S COSTA SAYS EUROPE IS IN `MODERATE RECESSION'

I'd hate to see what an immoderate recession is if a moderate recession porduces figures like Greek unemployment at 21.8%, Spanish at 22.87%, Portuguese at 15% and today's Italian industrial production number falling 6.8% (vs 5.1% expected fall).

And since fiscal policy is currently massively expansionary to combat this "moderate" recession, monetary policy need not be. Oh, forgot about that Austerity nonsense.

Spain's Deputy Trade Minister was clearly Knot happy (sorry again)

*SPAIN DEPUTY MINISTER SAYS `RESTRICTIVE' ECB POLICY IS ERROR

And he is probably not going to be appreciated at home for speaking the truth

*SPAIN WOULD BE `DEAD' WITHOUT CURRENT ECB FUNDING, LEGAZ SAYS

Coming after Banesto's shock (to some) results does this mean that it is a solvency problem rather than a liquidity problem facing the Spanish banking system?

The last word today goes to:

*SARKOZY SAYS FREEDOM COMES FROM CUTTING DEBT, REDUCING DEFICITS

I can understand each word individually but the profundity of the sentence escapes me.

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