Heroes and Villains

In the words of a former boss of mine, a man of distinguished career who eventually served in a highly important U.S. Cabinet post:

“Down there they have their heroes and villains. Up here we keep machines working. So if you’re talking to someone in this building, talk about the machine. If you’re outside the building, write it as heroes and villains.”

I thought of that as I watched Mario Draghi answer questions. He wasn’t grasping the whole heroes and villains part; it did not seem to serve a purpose from where he was sitting.

In the impressive building where I worked more than fifteen years ago, we were told to “un-involve” ourselves from the issues we were tasked to solve. We were asked to dissociate. We were asked to achieve a vantage from which we could see the landscape of a problem. We were asked to see the solution that others couldn't see.

I recently explained this to one of my nieces as we were watching the 2014 film “Divergent.”

“That’s why Tris climbed the Ferris wheel,” I said. “So she could be in position to see the flag which their team was charged with capturing. She realized that the ground battles meant nothing if the flag’s position wasn’t identified beforehand. From a lot higher up.”

It was not about heroes and villains at that moment, but about process. Tris assumed the role on the team that was properly hers. She delivered information so that her fellow team members could act efficiently. Each task in its proper order.

But that, according to my boss, was how you said it inside of the building.

Outside the building, my boss said, there had to be an emotional battle of some sort. A myth to live by.

“That’s how they understand,” he’d said.

Someone had to believe that he was about to win, another that she was about to lose something she hadn’t realized until now was fundamental and vital to her. It had to be something worth wanting, hoping, and marching for. It had to matter.

“Actually, the result does matter,” my boss had said. “Just not in the way they’re all in the habit of so fervently believing.”

I got the feeling that the man looked down on the word “fervent” itself. Machines weren’t supposed to be fervent. They just had to work.

In Draghi’s view, the ECB has more than delivered upon its role. It had climbed up the Ferris wheel, seen the flag, and delivered the tools necessary to all of the others to complete the job.

The next steps of the process now needed to engage. Each task in its proper order.

But outside of the building in which Draghi sat, there was a march about heroes and villains.

Draghi, in response to Claire Jones:

…while I think we have understanding for the reasons that are behind these protests and we understand the reasons, and frankly have to do with what I said before, namely the weak situation of this country, the weak economy and so on. But what I find in need to be corrected is the perception that the ECB is somehow guilty and is at the origin of this situation. Simply what is needed is to go back and ask yourself how you were two and half a years ago, three years ago. What was the situation? The financial system seemed to be on the verge of collapse. Interest rates were several hundred basis points higher than they are today.

The ECB has first of all lowered interest rates so much that now we are close to zero and we can’t go down any longer. And as I said no other greater central bank is now having banks paying to deposit money with the central bank. Second, we have injected unprecedented amounts of liquidity in the system. Third, we just approved now another series of measures. Fourth, we have successfully fought a crisis of systemic proportions in 2012, which actually led to lowering all the interest rates on various components. So I find the description of the ECB as the guilty actor here in need to be corrected.

Ignazio Visco (Governor, Bank of Italy) reinforced Draghi’s words in his own way:

These protests cannot be against monetary policy. Monetary policy has been clearly as easy as possible and will continue to be until the objectives are reached. But it (the protest) is against the state of the economy which has a number of causes. To identify the causes is complicated. To identify the answers is complicated. And usually this is a response that identifies the central bank with the banks and it is needed to be corrected. It identifies the ECB monetary policy with the decisions of the Troika. But the Troika does not make decisions. Troika somehow is surveyor of decisions taken by the governments. So it is an issue of politics; it’s not an issue of monetary policy.

While both men seemed saddened and irritated by the necessity of doing so, they both identified the problem.

Why aren’t sovereigns acting as and when they should? And why do they expect the Central Bank to play every position on the team? Why are the protesters villainizing the central bank?

Could it be that they perceive that the central bank is more powerful than the government of their own country?

It seems that they do.

Why protest Mario? Why not Matteo?

Draghi’s and Visco’s answer to Claire Jones (FT) revealed considerable tension around the perceived responsibilities of central banks vs. those of sovereigns. Each tried to illuminate the differences in sequence and type of support. Each made sure, in this answer and others, to spell out the opportunities and limits of monetary policy. To show that it is an effective but ultimately blunt instrument when applied to a jigsaw puzzle of very different economies and situations. A diversity which made the specificity of sovereign, bank, company and citizen action required to create success within each country, as needed and desired by each country.

It’s not ever all about the central bank. Except when it seems like it is, because every other machine seems untethered at the moment.

I have a feeling that some clarification on that point may emerge in near future ECB communication, as well as in the communication of his good friends stateside at the US Fed. One should trust, and give credit, but not overexpect from central banks. Or from monetary policy.

But in the current era, it is common to do so.

If central banks are being (mistakenly and fervently) held responsible for “sovereign behaviors,” and a lack of attention by sovereigns to structural reforms deemed necessary at this stage to achieve full benefit of recent and unprecedented central bank accommodation, there are two ways (high level here) this can reverberate through policy.

One, policy can call it enough and step back.

Two, it can step forward and call the protesters’ bluff.

While we have no official choice just yet, I’m seeing a leaning towards option number 2. Come 2015, we may see the ECB do more.

But here’s the question. Will it work?

Can the ECB do what individual nations will not? (If you are a US reader watching the Fed, this idea seems all too familiar.)

The protesters outside were not the only ones testing Draghi’s resolve. As asked by a journalist in attendance at the presser in Naples:

Yesterday France decided not to respect the deficit limit. And rightly this morning the Italian Prime Minister defended their choice and actually added that nobody could treat their partner as a pupil. So what is going on? What’s your opinion? Does it change the situation in the European monetary system?

(PRESIDENT DRAGHI) Well first, let me say that the euro area member states, I’m pretty sure euro area member states, the Commission, the ECB, all of us have an enormous interest in having France return to growth and lower unemployment. We should start from this point.

Second point is that we do trust the government to take all the necessary actions on the structural reform ground, starting with a forceful implementation of the Responsibility Pact, but also with a forceful implementation of other reforms. ..Now it’s implementation time, and that’s where the focus should be.

Draghi’s conversations with France and Italy, and the respective tensions they’ve raised, are well known to the press covering the ECB. In particular, there seems to be quite a chess game going on between Italian Prime Minister Matteo Renzi and President Draghi (who at an earlier time was the Governor of the Bank of Italy.) This heated conversation between clever men has been cast as a battle of egos and generations; Renzi is 39 and Draghi is 67. But to those watching stateside, it is also a moment of “sovereign vs. central bank.” About who owns what task, who earns credit in the eyes of the people, and how quickly. About who knows best in a time when no one is sure what the definition of “best” looks like.

Renzi currently occupies the rotating office of President of the Council of the European Union as well (since 1 July 2014) and this grants him high visibility and additional camera time for his challenges to Draghi’s (overly paternal?) instincts.

Draghi’s ever-ready “entrepreneur example” often seems Renzi-directed. Stated on Thursday in Naples with a protest going on outside, this Renzi association was magnified.

(DOMENICO CONTI, Ansa) Mr President, and Governor Visco as well, I have a question regarding the package of measures that have been launched by the ECB in June and are now taking place. First of all, there is the impression that such measures are predominantly addressed at the supply side and that in some way, the demand is still suffering. In other words, for instance why should companies borrow more in countries such as Italy, when they do not see such a significant improvement in demand and in growth, so isn’t there a risk that the ECB is actually pushing on a string?

(PRESIDENT DRAGHI) Certainly that’s what a central bank can do, and that’s what we are doing, namely improving the funding conditions for the main intermediation channel we have in this part of the world, namely the bank lending channel. As you know, it intermediates about 80% of credit flows. That’s certainly our task, and we’ve been doing a lot. We have done a lot. Just go back with your memory to the last three years, and even four or five years. We’ve done really a lot to improve the funding conditions, and now of course we are waiting, and we’ve seen some of it. We’ve seen that some of this is being passed very, painfully, slowly to the real economy, but certainly other measures are needed.

I have given the example several times of someone, a young entrepreneur, having to wait 9 months, 12 months, to have the authorisations and the permits to open a new shop, and then, by the time he gets these authorisations, he’s being overburdened by taxation of different kinds. You wouldn’t expect him to apply for credit, and that’s where the example tells that we need structural reforms as well.

Perhaps Draghi is resigned to the fact that not all of his team players will play in the way he wants. Is the ECB more than just the carpool mom? Is the ECB also the coach or teacher?

Consider the earlier reporter’s mention:

“The Italian Prime Minister defended their choice and actually added that nobody could treat their partner as a pupil. So what is going on?”

Are central banks more powerful than sovereigns, or have central banks done a lot for sovereigns who haven’t yet chosen to assume their role in improving the pace and opportunity of the eurozone economy?

Either could be argued, and the narrative seems to slide easily towards a heroes and villains storyline. Gavin Jones (Reuters) set his question up as a “this vs. that,” clearly to see what reaction and information might flow from it.

But Draghi (like my former boss and his Cabinet department) will have none of it.

He sees no heroes or villains. He sees a machine. He does not see a bargain. He does not see negotiation.

Draghi sees an operation that will either work as he wants it to, or won’t.

(GAVIN JONES, Reuters) …Secondly, you said yesterday that the monetary policy can only do so much in terms of reviving growth and confidence in the eurozone, and you’ve stressed in your introductory statement again today the importance of structural reforms, as you have done in the past, and also a respect for European budget rules.

Does that mean that you are running out of instruments or that you won’t do more until the governments do more?

(PRESIDENT DRAGHI) …On the second point, the question is actually quite topical, I think, because there is no great bargain here. We do this, if you do that. We know that our measures are going to be more effective, or sometimes are effective only if other policies will be in place. Policies, and I’ve mentioned several times, policies on the demand side, because the more we are in this situation, the more we see that the cyclical component in our business cycle is important, and it’s not only structural. It is true that to a great extent, our problems are structural, and that’s why we need the second, other policy, which is the one of structural reforms, so demand policies and structural reforms. We know that, but we also know that we want to comply with our mandate, so there is no bargain here.

Each actor has its role to perform.

Draghi sticks to his vantage. High up, where he can see what he needs to see.

But the question is still there. If the central bank is perceived as more powerful than all of the team members it gets to the game, then is more expected of it than it has so far given? Should the ECB sit back and let the play be performed, or should it take the director’s chair in areas that it never has been permitted to before?

Before moving along, a few words on the symbolic setting of the October 2014 meeting of the Governing Council of the ECB:

Palatial Splendor. Capodimonte.

The Royal Palace of Capodimonte was criticized as a location far too steeped in splendor. The selection of a palace for a meeting of governors of a central bank? The optics seemed less than well-planned. Should they not have met in a more austere space?

But I thought it was a symbolic sort of choice, one which embraces the conflict we’re discussing:

-The structure itself was born of a desire for sovereignty. As the first concrete sign of a leader’s desire and intent for self-rule.

-It’s located for its commanding views. From a high place, you can see forever.

-It served two official functions — as royal residence and as famous museum of things past.

-And there’s that meaningful and action-packed mention of “Vesuvius.”

Emphasis in the following description is mine.

(The Palace is a) masterpiece ordered by Charles of Bourbon. It is a huge building commanding a view over the whole city of Naples, once the seat of one of the world’s most famous manufactures and now housing one of the richest Italian museums.

On 10 September 1738 the construction work for this palace begun. In 1734 Charles was the sovereign of Naples and Sicily and he immediately ordered the construction of this new Palace to be the first concrete sign of his willingness to make the Kingdom independent from Spain and sovereign from all points of view.

Since the beginning, Charles chose the vast woods of Capodimonte (124 hectares) as site for the future Palace, from which he could admire the gulf and the city, laying mid-way between the Vesuvius, the hill of San Martino and Posillipo.

And since the very beginning the King gave the Palace the double function of royal residence and famous museum, just as Palazzo Pitti in Florence.

The ECB and the double function

Are we looking at a moment when the ECB is going to formally gain its own version of “double function?”

Put another way, is the ECB going to gain another mandate, one which will grant it more policy flexibility than it has so far enjoyed?

In a sense that’s the same question being asked in the United States, in the UK, and in Japan. Each has its own mandate picture and its own level of influence (the US Fed’s being far greater than the others) , but in all cases the question is: how do we go beyond the old tool box of monetary policy to solve the issues faced by a rapidly transitioning global economy?

It’s an exciting and fearful question, and whether exciting or fearful is more dominant depends upon whom you ask. Many who rightfully question the necessity and purpose of the US Fed’s addition of a jobs mandate hold up the purity of the single mandated (price stability) ECB as a model of virtue.

While there’s good reason for that, such “virtue” may be short lived.

As the US, UK and Japan, all three of which interact systemically with the ECB, pursue a macroprudential framework dedicated to promoting resilience and financial stability, each has seen their influence grow vis a vis sovereign oversight and policymaking. The ECB is no different. However, the ECB may catch greater attention than the others as it makes its changes. The nations which comprise it are vocal - and many, strong or weak, are weary of the creeping oversight of supranationals and central banks into their own unique cultural and governance frameworks. Secondly, the geopolitical risks of events in the Middle East and Russia, both proximate to Europe physically, economically and emotionally, could create incidents of crisis within which uncharted and even unlimited action could override original mandates.

No one argues that combating low inflation is the ECB’s job.

But all agree that the original mandate is getting stretched, and that the tradeoffs associated with that original mandate may be outdated in current circumstances.

It’s within this lens that we see the internal conflict that Draghi is facing. On the one hand, he was candid in calling for sovereigns to take up their tasklist and do what was necessary. The central bank has acted, and it is now their turn.

Yet he is proposing an ABS programme which appears to act dramatically — far over the heads of sovereigns.

Can he state both of these contradictory positions at once? So far, he has.

As inclusive as possible, but with prudence: The proposed ABS and Covered Bond purchase programme.

A much awaited programme, one specifically designed to target lending to SMEs in the private (non financial) sector, will begin earlier than most of us expected. Purchases of covered bonds are scheduled for mid October, less than two weeks from this writing.

ABS and Covered bonds purchase join the TLTROs as a way to target benefit to regions and tiers of the economy that have so far been unresponsive to earlier accommodation as introduced via previous lending directed efforts, including the untargeted and blunt instrument of interest rate cuts.

Yet the real core of this is found right in Draghi’s words on the impending programme.

(The programmes) will thereby further enhance the functioning of the monetary policy transmission mechanism, facilitate credit provision to the broad economy and generate positive spillovers to other markets. Taking into account the overall subdued outlook for inflation, the weakening in the euro area’s growth momentum over the recent past and the continued subdued monetary and credit dynamics, our asset purchases should ease the monetary policy stance more broadly. They should also strengthen our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies.

Here, Draghi acknowledges two things:

• This is about the monetary policy transmission mechanism itself. The program is designed to catalyze it by having an accommodative effect on issuance. Some, and I’m of this opinion, would say that “repair and revision” of the transmission mechanism would be better terms.
• The ideal result involves beneficial spillover.

The move is dramatic. It’s also vague. My words for it? This is less a catalyst than a stone skip. Consider:

The monetary policy transmission mechanism itself is broken, and this does not just have to do with Europe. Draghi is stating that the blunt force of the interest rate will not directly touch the cracks it needs to fill in the economy, so a targeted move is needed to allow the impact of the measures to flow to areas of need. All well intentioned, but it involves a series of “if this, then this” events — a sequence akin to skipping a stone on a lake. If you throw the stone the right way (I have practiced a lot myself at Lake Tahoe) you are almost certain to get one skip, and you’ll probably get two or three. But to get to four or five, you must not just throw the stone correctly. You need the conditions for the stone skip to be a certain way.

You can choose your location and timing well towards achieving this, but once your throw is made, you can’t control the stone or the lake. Draghi cannot control these programmes, and he remained vague on several points for a very understandable reasons. He doesn’t know the answers yet. Those answers are not known until the programme begins. Or until he sees how sovereigns will cooperate, or not, in creating ideal “stone skip” conditions for the plan he has proposed.

How will all of the parallel programmes (ABS, Covered bonds, and the already launched TLTROs) affect each other dynamically?

Many journalists present tried to pin Draghi into a number, a range for the programme. No range was given, though there were vague references to re-achievement of past balance sheet levels. He sounded less than committal in these statements.

He made clear to a number of journalists, that he wouldn’t be pinned down on the exact threshold he was targeting for the balance sheet expansion that the purchase programme would bring. In his response to Johanna Maria Treeck (MNI) Draghi emphasized that his goal was to manage inflation expectations back up to the 2% level. The balance sheet was a way to do that, not a goal in itself. So getting hung up on exactitudes of the balance sheet wasn’t purposeful right now.

Nor would he say if this series of efforts, unprecedented for the ECB and unconventional by any measure, was the ECB’s final blow at the low inflation issues the eurozone is facing.

Stating that the Governing Council unanimously remains ready to dive into further unconventional measures if necessary, he gave the strong impression that this wasn't the final blow at all.

This matters. If I were thinking about participating I might wait. I might think we’re going to get QE. Consider that while Germany will push back on such matters, the Federal Reserve might support them, and the Federal Reserve’s will is big enough to challenge Germany’s. (A topic for a future post.)

Here are the basics shared in the European Central Bank’s own 2 October 2014 press release, ECB announces operational details of asset-backed securities and covered bond purchase programmes:

§ Programmes will last at least two years

§ Will enhance transmission of monetary policy, support provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation

§ Eurosystem collateral framework is guiding principle for eligibility of assets for purchase

§ Asset purchases to start in fourth quarter 2014, starting with covered bonds in second-half of October

The Governing Council of the European Central Bank (ECB) today agreed key details regarding the operation of its new programmes to buy simple and transparent asset-backed securities (ABSs) and a broad portfolio of euro-denominated covered bonds. Together with the targeted longer-term refinancing operations, the purchase programmes will further enhance the transmission of monetary policy. They will facilitate credit provision to the euro area economy, generate positive spill-overs to other markets and, as a result, ease the ECB’s monetary policy stance. (Emphasis mine.) These measures will have a sizeable impact on the Eurosystem’s balance sheet and will contribute to a return of inflation rates to levels closer to 2%.

The Eurosystem’s collateral framework – the rules that lay out which assets are acceptable as collateral for monetary policy credit operations – will be the guiding principle for deciding the eligibility of assets to be bought under the ABS purchase programme (ABSPP) and covered bond purchase programme (CBPP3). There will be some adjustments to take into account the difference between accepting assets as collateral and buying assets outright. To ensure that the programmes can include the whole euro area, ABSs and covered bonds from Greece and Cyprus that are currently not eligible as collateral for monetary policy operations will be subject to specific rules with risk-mitigating measures.

The two programmes will last for at least two years and are likely to have a stimulating effect on issuance. Asset purchases will commence in the fourth quarter of 2014, starting with covered bonds in the second half of October. The ABSPP will start after external service providers have been selected, following an ongoing procurement process.

In reading this, I have two unresolved points, the first of which came up directly in the presser.

Toward the objective of inclusivity, both Greek and Cypriot bonds that typically do not eligible as collateral for monetary policy operations will be allowed under specific rules.

The question is what this will look like in practice. I am expecting that while the programme will include both Greek and Cypriot debt, it will not go overboard on purchases of it, for reasons of prudence. So it may be a showpiece rather than an actual support within those economies.

Additionally, and towards another post, the requirement of a current programme of oversight links participation in a private sector programme to current oversight within a sovereign directed programme.

As Draghi quipped, “No programme, no purchase.”

This already seems uncomfortable. It will undoubtedly create jurisdictional questions of the sort we’ve already discussed. What tasks are sovereign and what tasks belong to the central bank? In the case of direct purchase of private securities by the central bank, one must review supervisory linkages and be aware of potential conflicts. A topic for a future post, based upon my pending observation of early programme operations.

My second unresolved point is illustrated by the image below. It’s a snapshot of the tiers in the current European ABS market.

The yellow box to the far right is where programme impact is desired. But the volume in that area is too small.

This presents an issue that’s all too well known to those stateside. How do you compensate for low supply, low flow, low diversity of issuers?

The basic textbook answer: You enable increase and diversification of supply. You structure what you need to address the problem you want to solve.

US readers, does that sound familiar?

Something to remember as the eurozone ABS market is redesigned and rejuvenated post crisis: Just about every good intention has a potentially ugly result attached, so tread lightly.

When President Draghi announced the ABS programme idea earlier this year, he said that three themes would guide purchases: “Simple, transparent and real.”

In the 4 september ECB press conference, the phrase became “simple and transparent.” Without announcement, real was gone. It remained absent on 2 october.

The drop of “real” from the slogan is an indication that derivatives are back on the table.

I don’t think this is a bad thing in general, but in saying that I have some stricter — and some unconventional and populist — expectations of how I’d see it happening.

The good news and bad news is we know what we don’t want to see happen with an asset backed securities market designed to increase lending to sub-SIFI tier, non financial borrowers.

I am confident that President Draghi is considering mistakes of the last decade with necessary gravity. I’m eagerly awaiting further detail.

Medium Term Inflation Expectations: This ship has no anchor, but it’s actively looking for one.

One of the stressful yet inevitable surprises of the 4 September presser was the absence of the usual term “firmly anchored” in the prepared statement read by President Draghi prior to questions and answers. Draghi’s acknowledgement of the untethering of inflation expectations over the medium term seemed a harbinger of things less conventional, more rapid and more unexpected.

This not only includes more and bigger ways to combat low inflation. It also includes a new way to view ongoing data.

PRESIDENT DRAGHI First of all the inflation expectations. Let me get this clear, because there has been a certain amount of misunderstanding in the last few weeks. We don’t use one single measure of inflationary expectations. We use a broad range of indicators, and our inflation expectations measures have gone down, especially on the short horizons, and are now around eight points below 2% on the five year on five year. So we look at that definitely with great attention.

Draghi’s reply to Alessandro Merli (Il Sole 24 Ore) reminded me of discussions at Jackson Hole (Wyoming, USA) in August 2014. Focused upon the labor market and the deconstruction of yesterday’s big and blunt indicators into dynamic, precise, targeted pictures of the market’s evolving character, our view of inflation also was renewed and deconstructed.

While compelling for all in attendance, it was especially appropriate for President Draghi. The low inflation issue he faces is not uniform across all eurozone economies.

In fact, he has a different situation in every country. (So it was more than helpful for him to be speaking at a conference in a country with 50 unique states.)

Draghi sees cases in which certain measures of austerity were solid building blocks of progress. He has others in which austerity took the form of harsh tax increases, and set back countries who might have done far better with more open-minded, less austere near term policy.

Over several past meetings, Draghi has parsed out the components of the inflation number, including food and energy prices and fluctuations in the value of the euro. He broke from script at Jackson Hole, however, noting that these components did not explain the whole picture. He was candid in noting that monetary policy alone would not resolve the issue eurozone wide.

The ECB would have to think differently. It would have to think outside of its designated box.

At Jackson Hole, it was easy to see that other central bank leaders support him in this idea. Yet others closer to home remain rightfully skeptical. Draghi addressed a question about euroscepticism on 2 October, even saying that he understands why many loathe the euro. In reply to Brian Blackstone’s (WSJ) and Alessandro Speciale’s (Bloomberg News) questions about the exchange rate, and deliberate endeavors by the ECB to suppress it in order to invoke inflation’s appearance, he became defensive.

(BRIAN BLACKSTONE, WSJ) I just wanted to first of all press you a little more on this question on the exchange rate. You have commented before on the fundamentals for a weaker exchange rate changing compared to previous months or weeks. You do say in the opening statement that your policy should reinforce the fact that there are significant and increasing differences in monetary policy. Doesn’t it stand to reason that these fundamentals for a weaker exchange rate are still valid in your opinion, despite even in the light of the recent weakening that we have seen?

(PRESIDENT DRAGHI) You’re trying to kind of extort from me a level of the exchange rate, and unfortunately, I’m not in a position to accommodate your question there.

Such powerful contrary voices as Juergen Stark, a former executive board member of the ECB, have openly called the ECBs apparent play with the exchange rate outside of its mandate. I’m anticipating far more stretches of the mandate in the coming months, all in the name of inflation targeting. On that note, I’m hoping that Blackstone will come back to the second half of his question in a future presser.

(BRIAN BLACKSTONE, WSJ) My second question is just maybe a bigger-picture one on low inflation. With a lot of people in Europe, families in Europe, struggling, how can you tell them or explain to them that paying more at the gas station, or the grocery store, or the clothing store, is ultimately in their interests, that higher inflation is good for them?

It seems like a simple question, but it’s quite prescient. Once the measures are successful and inflation takes hold, the real economy (and its real life, beyond metaphor carpool moms) will confront price shifts. Should this happen out of tandem with wage shifts, we will observe a timeframe in which the (deliberately?) depressed euro has been a blessing to the carry trade and a punishment to the real economy.

This indefinite period of tension will bring the central bank face to face with sovereigns again. Who will face the people? Claire Jones, (Financial Times) may want to ask her protesters question once again.