What does it say...

Thursday, January 15, 2009

...about ECB credibility that with 300 respondents in the poll, the joke response (hike 100 bps) was the third most popular answer?

-50 53%

-75 17%

+100 11%

-25 11%

0 4%

-100 4%

Posted by Macro Man at 12:40 PM  


Nothing good, still "establishing credibility"? Interesting academic perspective...
"Action stations"
Cheers, JL

Anonymous said...
12:47 PM  

Hey, we hit it :)

Mihai Bobocea said...
1:07 PM  

As I said before...

There are too many Germans in the Union still fighting their inflationary Great Depression of the Weimar era. Always one step in the grave of a liquidity party.

Mr Risk said...
1:30 PM  

could probably dissolve the ECB and use this blog to establish interest policy in the EU. would be cheaper and save them some $ at least.

prophets said...
2:51 PM  

I am happy to write a spreadsheet with a randomizer that, when you hit shift F9, will spit out one of the following:

"more than 300 million citizens count on us for price stability"

"we are concerned about inflationary pressures in the medium term"

"we must have discipline in wage setting"

"we never pre-commit to interest rate moves"

"price stability is the only needle on our compass"

whaddya think?

Macro Man said...
3:01 PM  

Yes MM that is pretty much it. Who said a CB had to be entertaining?

Christian said...
3:39 PM  

Nobody, but a competence at economic forecasting is usually desirable.

Macro Man said...
4:16 PM  

Macroman. Allow me to defend my fellow compatriot JC.

I will first say that the ECB got it completely wrong last July when they hiked; the whole of Europe was already in recession; they were looking in the rear view mirror and lost some credibility. I’ll give you that. I found it all the more disappointing that when they started hiking at the end of 2004, everybody in the Anglo-Saxon world laughed saying that the euro economies could not take any rate hikes and that growth would collapsed straight away. They were wrong and the ECB was forward looking and correct.

Because of what happened last July many argue that if we have a recession now it’s the ECBs fault. This is ridiculous. The ECB had a really good call publically and privately on a lot of matters: remember when they said: “ …banks are crazy to offer covenant light leveraged loans …. Banks are misreading the true depth of inter bank unsecured liquidity …. Lack of fiscal discipline will lead to much wider issuance spreads at some point ….”

If we are where we are today it is largely because some morons somewhere came up with fantastic concepts like “ no recourse mortgages or funds with no third party administrators …”. When we watch “The Incredibles” with the Macroboys … think of JC as Mister Incredible when he says “ …. I’ve just cleaned this mess … can you try to keep it clean for a day …?”

BlueMonday said...
5:29 PM  

Well, it says a lot about also about the amused readers :)

Yohay said...
6:18 PM  

MM, economic forecasting is another term for "your guess is as good as mine."

Price stability is another term for "very behind the curve, but loving it."

Fiscal discipline is another term for "sitting on our hands until the bombs hit."

Mr Risk said...
9:01 PM  

" Nobody, but a competence at economic forecasting is usually desirable."

A bit far-fetched wouldn't you say?
Surely you understand the ECB doesn't have to agree with your forecasting to be deemed competent....

Christian said...
9:05 PM  

300 million citizens is another term for "you silly goose, like all the other lemmings, you've got no choice."

inflationary pressures is another term for "boogey man's under your bed."

never pre-commit is another term for "I still like to shag all the ladies down at the West End."

Mr Risk said...
9:07 PM  

Christian, their forecasts don't have to agree with mine, but it would be really useful if they agreed with reality.

What sort of economist can't see that inflation pressures will recede as oil collapses, which it started to do in August? A bad one.

What sort of economist feels the need to warn about the dangers of rising wages as a recession starts to bite and unemployment starts to rise? A bad one.

While the ECB's policy orientation is a matter of taste, it is difficult to escape the conclusion that Trichet et al are just spectacularly bad economic forecasters.

Macro Man said...
10:26 PM  

to be fair, oil future curve shows pretty elevated price move in the next year+. short-term cash pricing is somewhat dominated by a ST inventory pop.

guess the $64k question is how much excess production capacity does the world have (particularly in China) and what utilization rate will we be seeing and for how long...

prophets said...
10:39 PM  

Is this blog dedicated to bashing the ECB ?
If you can't talk about anything else, you should change your name. Something like "ECBBasherMan".
Should be more appropriate.

ozone said...
11:34 PM  

Better Trichet than Bernanke.

But there will be a lag before that lesson is learned.

Jesse said...
7:16 AM  

Big scale, global money counterfeiters are always concerned about "getting caught..." ahem, I mean "inflation."

But don't you think that forecasting inflation may not be so much a prediction as it is a prayer?

Mr Risk said...
9:52 AM  

"What sort of economist feels the need to warn about the dangers of rising wages as a recession starts to bite and unemployment starts to rise? A bad one."

To be fair, they were warning of this around the time that IG Metall were asking for an 8% pay rise, and Lufthansa had just agreed a 5% increase...

Anonymous said...
10:56 AM  

...and yesterday as well!

Macro Man said...
11:00 AM  

Fair point - I'll let you have that one

Anonymous said...
12:45 PM  

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