Well done Warsaw: Poland’s debt trumps Germany’s and America’s | The Economist.
“ANYONE who takes financial-market indicators as a guide to the real world must be mad or a banker. But it is still interesting to note, as Bloomberg has just calculated, that on risk-adjusted returns Polish government bonds are a better bet than either German bunds or US Treasuries.” Economist 8.02.2012
Charles I. Plosser (Phil Fed) – “Pressure on central banks is also showing up through other channels. In some circles, it has become fashionable to invoke “lender of last resort” arguments as a reason for central banks to engage in fiscal actions. This is a strained argument at best. The basic role of a lender of last resort is to provide liquidity to financial institutions that are solvent but facing temporary liquidity problems. Yet recently, some have used the concept to argue that the central bank should be the lender of last resort to governments. This is a perversion of one of central banking’s core concepts. It is a fig leaf to conceal the process of monetizing the sovereign debt of those countries that are insolvent due to their inability to manage their fiscal affairs. Monetary policy should not be used to solve a fiscal crisis.”
… A. Blinder, O. Issing, R. Nixon and W. Duisenberg because quotations from these people helped me to defend my PhD thesis in economics.
http://www.tse.fi/EN/media/events/Pages/DissertationDefenceLicSocScAleksandraMaslowska.aspx
http://www.tse.fi/EN/media/news/Pages/DissertationCentral-Bank-Independence-Matters.aspx
I am currently writing my PhD defence speech and, while searching for inspiration, I am checking what others wrote at their times of breakthrough. It is somewhat interesting and symbolic what Arthur Burns and Paul Volcker wrote in their Per Jacobsson lectures.
Both lectures celebrated the end of the careers as Federal Reserve governors. Burns speech took place in 1979, while Volcker spoke in 1990. It is also somehow intriguing that Volcker inherited double-digit inflation from Burns. But still, Burns in 1979 titled his lecture: The Anguish of Central Banking, whereas Volcker was talking about: The Triumph of Central Banking.
So what is it going to be in 2012 in my lecture? Probably I am an incurable optimist because I believe in the triumph of central bankers.
My D-day when I prove I can be an independent researcher is finally approaching.
The European Financial Stability Facility, the euro area’s bailout fund, lost its top credit rating at Standard & Poor’s after earlier downgrades of France and Austria.
http://www.bloomberg.com/news/2012-01-16/s-p-cuts-efs-facility-to-aa-from-aaa.html
“You’ve got to feel sorry for the people at the Fed who have to keep cleaning up the mess that the fiscal policy makers leave,” MacGuineas said.
More in Bloomberg’ story:
Central Banks Ease Most Since ’09 to Avert Europe-Led Slump
You JUST need to answer to a question: how to manage the orderly exit of one or more member states from the European Monetary Union. The Wolfson Economics Prize, second in the amount after the Nobel Prize is founded by Lord Wolfson of Aspley Guise. The deadline for submissions is January 31st, 2012. More details: http://www.policyexchange.org.uk/assets/Wolfson_PR_EN.pdf
Anyone interested to join my team?
In the official press release from yesterday, November 10, 2011, the European Central Bank announces that Lorenzo Bini Smaghi “will resign from his position prior to the end of his term of office on 31 May 2013 to join Harvard University’s Center for International Affairs on 1 January 2012. Mr Bini Smaghi has been a Member of the Executive Board and Governing Council since 1 June 2005.”
As a reminder: Nicolas Sarkozy, France’s president has been strongly suggesting Bini Smaghi should resign from his post. Sarkozy’s been explaining that the moment Mario Draghi becomes the ECB president, Italy would have two representatives in the ECB Executive Board while France would have none. Italy’s prime minister (currently former PM) Silvio Berlusconi has also urged his compatriot to step down. As Financial Times describes it: ” “What should I do, should I kill him?” Mr Berlusconi said he told Mr Sarkozy at a summit in Brussels last month.” (see http://www.ft.com/intl/cms/s/0/1ba7a48c-0bc3-11e1-9310-00144feabdc0.html#axzz1dNqM1GaP).
After Jürgen Stark, German representative quitting the ECB post, this is yet another proof that even “independent” monetary policy of the supposedly “independent” ECB is just a political game. The game that currently is too costly to play. How short-sighted one has to be to worry about personal country-ratio in the middle of the heaviest and most severe economic and financial turmoil for years?
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