A Premature Victory Lap?
Has Draghi Won the Battle with Financial Markets? – an article at CNBC asks, expressing the hope that he has, but also a bit of unease over the possibility that more trouble may be coming down the pike. Generally the reportage on Thursday's ECB meeting and the decision to stand pat on the paltry 0.75 percent refinance rate was similarly tinged across the financial media. With the “battle against the markets” seemingly won, Draghi could now “afford” not to cut his almost non-existent benchmark rate even further toward non-existence. Instead, he could now “keep some of his powder dry”, just in case those unruly markets were to pipe up again. The mood is best exemplified by this excerpt from the CNBC article:
“Kathy Lien, managing director at BK Asset Management in New York, says investors realize that Draghi's satisfaction with improvements in financial markets means the ECB is less inclined to ramp up stimulus measures.
"With financial market sentiment improving significantly, tail risks removed and funding conditions at satisfactory levels, Draghi believes that the financial markets have now returned to normalcy," she said in a research note.
"The main takeaway from the meeting is that the ECB is no longer in crisis fighting mode because the battle with the financial markets has been won," she said.”
(emphasis added)
Not a word anywhere about the fact that the markets didn't just go into paroxysms for the hell of it, but that the whole unsustainable financial fabric of the modern-day welfare State was for a brief time exposed – with its ultimate destination revealed.
Whatever would we do if we had no bureaucrats and politicians willing to do 'battle' with the markets?
