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Wednesday, 13 December 2017

Saint Mario in Malta

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  • Peters 475px June 2014

Expect another fix of financial morphine from the ECB.

Day four of what has so far been a fairly tedious and featureless week at what used to be seen as the cutting edge of markets. That’s not to say that there’s nothing going on but it is becoming progressively harder to discern trends. Bits here and bits there but that’s about it. October used to be one of the busiest months of the year. Currently it’s giving Valium a good run for its money.

That said, there is plenty of interesting news coming the pipelines. Today the Central Council of the ECB meets in Valetta which offers Malta a nice fillip of late tourism (did I really say and mean tourism?) and at which no moves on the policy front are to be expected.

But it’s not about the announcement today but about whether Saint Mario will don his shining armour once again, mount his trusty steed and appease the baying masses with a promise of more Quantitative Easing?

Who can’t remember the ECB’s former resistance to the idea of liberally pumping money into the eurozone economy? Who can forget the fierce fight put up by the Bundesbank’s Jens Weidmann and Sabine Lautenschlaeger? Well, they could well still argue that all the QE offered up has so far done dick on a stick in terms of stimulating growth and driving inflation and ask whether doubling the input into a policy which hasn’t borne the desired fruit is of any value at all?

Well, perception is reality and cost of declaring QE to have failed is probably higher than ratcheting it up another notch or two. When the addict in rehab is screaming the house down, offering him a free fix is still the easiest way to get him to shut up.

If there is one line I’d like to be remembered for, it’s that disappointment is not an absolute value but a function of expectations. In my column yesterday, I noted that Europe is weighed down by its focus on process over objective. The shortest distance between two points is a straight line but I’m sure you’ll agree that process is very rarely applied in order to create such a straight line.

Is the ECB being asked to help create illusory growth in an economic area which hasn’t yet completed the course of readjustment to a world in which nobody owes it a living? My opinions on that point aren’t a secret. It is so obsessed with its own navel gazing that it often fails to grasp that it is falling ever further behind the outside world. The sole authority which seems to look outside the box, beyond the boundaries, would be the ECB and the burden placed upon it to overcome many of the age-old structural problems embedded in the EU’s political and social architecture are overwhelming.

Thus, the path of least resistance will be to increase the commitment to QE, make some nice statements that things are moving in the right direction and that one more push should do it and everyone can go home to wife and children. Do whatever you want to do, just don’t rock the boat.

By Joe, what a shame

Elsewhere, Joe Biden has finally declared that he will not stand for nomination as Democrat candidate for the Presidency. Personally, I think that’s a huge shame, not least of all because I can’t see Hilary as being the right one. She was, eight years ago, but got trumped by the first term Senator Barry O’Bama. Now I think she is a spent force for whom winning the nomination has become the holy grail and an end in itself. I liked Biden, not despite his lack of profile but because of it. America doesn’t need a rain-maker in the White House; it needs a quiet and firm pair of hands in order to steady the ship. In 2016, boring would have been good. If, in his inner self, Biden simply doesn’t want the job, I have all respect for him. I wouldn’t either.

Did anyone hear Mark “The Magician” Carney on the UK in the EU yesterday? I did, and I am wondering what the hell he is doing involving himself in a political debate in what is, despite his job title, a foreign country? The Governor of the Bank of England, a civil servant, albeit a senior one, should keep out of the political arena. A lesser civil servant would be carpeted, dressed down, demoted and possibly fired to saying what he said. Sorry, folks, I just don’t like the guy and he has so far done very little to make me change my mind. I’d fully understand if he didn’t speak too highly of me either.

Ferrari NV opened on the NYSE under the ticker RACE. Very funny. The stock was priced at US$52.00, opened at US$61.00 and closed at US$55.00. I do hope that whoever is long at US$61.00 isn’t expecting any shareholder discounts….

Incidentally, 22.5m of the 17.7m shares were traded on Day One. I’m glad to see the stability and maturity of the shareholdership.

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Alas, for me it is that time of the week again as I head off to hospital tomorrow for what I hope to be, just under four months on, my last routine visit. Thus, all that remains is for me to wish you and yours a happy and peaceful week-end.

The lone Englishman has been joined in the bar by the Scotsman, the Welshman and the Irishman. Sadly, they can’t get a drink or a snack because the Australian barman and the South African short-order chef are Twickenham at the rugby……

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