Remember when conventional wisdom said central banks are apolitical and impartial, and anyone who claimed that the world's money printers (which in the New Normal of failed fiscal policy means the only source of stimulus, and thus infinite political leverage and an existence "above the law") are in fact the most political and partial entities was, what else, a conspiracy theorist? Well, there goes another conspiracy theory, replaced by conspiracy fact.
Yesterday, Polish magazine Wprost released a recording of a meeting between Interior Minister Bartlomiej Sienkiewicz and central bank Governor Marek Belka which took place in a Warsaw restaurant in July 2013. In the recording, Belka told the minister he would be willing to help the government out of its economic troubles if the finance minister was fired.
According to Bloomberg, which released the details earlier, Sienkiewicz allegedly heard on recording asking Belka if central bank would be able to support government 8 months before election if slow economic recovery and weak budget situation coincide with surge in support for opposition Law and Justice party.
Belka was then heard discussing “non-standard” support that includes “very significant change” in central bank status, and was heard saying he’s ready to help under condition that Finance Minister Jacek Rostowski is replaced by "technical and apolitical finance minister, who will find full support in the central bank."
Odd: an elected government official being replaced by unelected technocrats who get the blessing of bankers, pardon, central bankers. Where have we seen that before? Oh wait, pretty much in every insolvent European country whose government is merely a group of sock-puppets designed to perpetuate the lie of democracy, and where all the relevant decisions are made by Mario Draghi.
Needless to say, Belka has been in damage control mode for the past 24 hours. Not because of what was on the tape, but because, just like the taboo topic of gold manipulation finally exploding on the public scene last month, so the fact that central banks are really the only "governing" force, subject to zero checks and balances (remember: "Get to work Mr [central banker]"), in a world in which the farce of democracy has been completely eradicated has finally been revealed to the entire public.
Some politicians had demanded the resignation of Belka, a long-standing political heavyweight who is generally seen as a safe pair of hands by investors with assets in Poland, the European Union's sixth-biggest economy.
In the first public comment from the central bank since the tape first emerged about 24 hours earlier, it issued a statement denying Belka broke the rules that stipulate the central bank must be independent from the government.
"Governor Belka gave a signal in this statement that he does not intend to resign," said Rafal Benecki, chief economist with ING Bank Slaski. "It seems to me there will be no market reaction, or it will be very insignificant."
But several economists and sources close to the government said the tape - especially derogatory remarks Belka made about the central bank's rate-setting council - could make it harder to conduct monetary policy.
Elzbieta Chojna-Duch, one of the members of the council, told Reuters it was a "difficult situation", and said it was likely Belka would give an explanation at the council's next scheduled sitting, on Tuesday. Belka is chair of the council.
In its statement, the bank said Belka expressed deep regret for the language he used in the conversation, with Interior Minister Bartlomiej Sienkiewicz. It said he "apologises to all who have been affected and offended."
But the bank denied Belka, 62, a former prime minister and finance minister, had done anything more serious.
Well of course it denied: the central bank after all is the supreme governing institution in the New Normal, a world which is run not by government but by banks. As such, it only makes sense that the unelected central bankers are convinced they are above everyone, and certainly the law.
It said Belka had met Sienkiewicz last year and the conversation touched on then finance minister, Jacek Rostowski.
"In the private part of conversation Marek Belka informed Bartlomiej Sienkiewicz about the lack of cooperation from the minister of finance," the bank said.
And here come the excuses: it was taken out of context:
"From the nearly two-hour conversation, only a few minutes of out-of-context passages were published that talk about the stability of the financial system."
This was manipulated to try to present the remarks as exceeding the powers of the bank's governor, "which never happened", the statement said.
Of course not, but not for the bullshit reason given: simply, the power of the bank's governor has no limits (after all they are the source of all the prosperity and wealth effect, without them government would crash and burn: they are above the law) and thus can not be exceeded.
So, technically, the central bank statement was correct.
Speaking of the derogatory remarks about the rate council, here is what the untouchable central printer said:
"Of course, we have this fucking Monetary Policy Council," says the man in the recording, who sounds like Belka. "But we are able to play with it."
The recording also has Belka making disparaging personal remarks about one of the council members, Jerzy Hausner. Hausner told Reuters on Sunday he had no comment.
Because how dare a fucking monetary policy council have opinions that differ from those of the uber-central planner, who works merely on behalf of a few other central, and commercial banks. After all, it is no longer "we are from the government and are here to help you." In the New Normal, it is all about the chief economist central banker - usually the person who hasn't worked one day in the private sector- who can't wait to be of help for the common man. And some still wonder why the world is one step away from total collapse.
What happens next?
Prime Minister Donald Tusk has said he will comment on the tape on Monday at 3 p.m. (1300 GMT). An economist with a major bank, who did not want to be identified, said "it is hard to imagine that Belka would still be able to work together with the MPC".
The central bank is in the process of deciding whether to cut rates, which would mean dropping its policy of keeping them flat until the fourth quarter.
Markets where Poland's zloty currency is traded were operating on Sunday, but there were no transactions taking place, according to Reuters data.
In other words, nothing happens next, because in the New Normal the only thing that shows if something has "changed" is apparently the market's reaction. The very same rigged and manipulated markets which are now exclusively under the control of, you guessed it, the central bank.
And now, go back to buying stocks and giving your praise to the only (unelected) leaders, pardon, despots, that matter: central bankers.
Link to official Polish central bank response here.