So Mario Draghi thinks that the worst times for the Eurozone are behind it?
Does he really?
Just yesterday Fed Chairman Ben Bernanke was admonishing Europe to put its financial house in order.
Is Draghi thumbing his nose at Bernanke?
I can think of little that is worse than having Draghi and Bernanke at odds personally or in disagreement over policy risks. But then, there it is... out in the open.
Europe is still benefiting from dollar swaps extended to it by the Federal Reserve. Just today the MFG and Services PMI's for the e-Zone were issued and proved to be very weak.
Draghi seems to be sticking his neck out under very uncertain times. Not only is the MFG PMI in Europe showing contraction for eight straight months but the service sector PMI has had its own run of bad news as well. Many European economies already are contracting and laboring under the weight of austerity plans that are not adjustable. One size fits none...
Europe would seem to be very fragile, very at risk and so the Draghi statement seems rather ill-timed and frankly wrong. I fact almost nothing has been done to fix the real European problems.
The ECB's run of LTRO lending has only been like a mega drop of 'helicopter band aids'. Banks are ever more exposed to sovereign debt where those sovereigns' circumstance are not improved but whose bond auctions have been 'band aided' ('band aided' can be used a verb, can't it?)to look like normal.
Europe seems deeply at risk and these two very important central bank heads seem to be at odds.
This is a bad development with the German firm Taunus having found a crack in the US regulatory wall. Well, if an entity that big can squeeze through a crack to evade stronger capital requirements there is no wall. And this is the unit that was the holding company for Deutschebank operations in the US. Crack kills. A crack this big will kill a lot.
We need the monetary policymakers on both sides of the Atlantic on the same page and not at war. Especially when large regulatory issues emerge. I assume the large Deutschebank holding company Taunus is one such issue or will become one.
On a slightly different note, the ongoing weakness in the PMIs in Europe will raise some eyebrows here. I know without talking to them that the folk at ECRI (the guys with the US recession call still in place) are happy to see this weakness in EMU and Chinese MFG PMIs since it helps to validate their case. They point to the coincident nature of global MFG. We will now put that view to the test.
The US regional MFG surveys so far are not on board with that view but its one to stay tuned to.
Lots to keep an eye on and all too many policymakers talking to believe them all..or even any of them.
END