Friday, July 21, 2017


I suppose one should simply conclude that Mario just wasn't ready despite his comments that the Euroland economy was robust and the future was looking bright.  Funny, when I was growing up central bankers were viewed as exterminators and the bug they were after was inflation.  Worse than a cockroach, inflation.  Tall Paul, starting in 1979 killed most of Latin America and points east and west for a generation.But by God he killed inflation!  Oh, he didn't mean to wipe out half the world but not even a guy as smart as Volker can always spot the Law of Unintended Consequences at work. But today?  Mario has a strong economy, a strong currency, a tame IMF but what does he want?  INFLATION,  When does he want it?  NOW!   Until he gets it, free money for everybody.  Why, one might ask.

I suppose there are really good reasons for this and in what was an attempt to justify the same there appeared a story in one of our great New York newspapers as to how Sr. Draghi's policies saved an Italian manufacturer of railway cars in a moderate sized Italian city.  The names shall remain unmentioned here.

Seems as though this manufacturer was having a spot of trouble in obtaining financing to supply Ferrovia Della Stato, the national railway of Italy.  Up pops Mario and his plan for quantitative easing and lo and behold the unnamed corporate heads straight to the bond market with the idea that there might be a bid out there for his debt (where did it get that from?).  Corporate gets money, Ferrovia places an order, jobs come back and the town is saved!  What could be better?

Now by this time you know I'm a suspicious sort but in this case there's nothing about which one should be suspicious.  I mean, just because it appears that the lack of purchases might have been caused by the fact that technology had rolled past the Italian cho-cho manufacturer (it had) or that the manufacturer wasn't Italian any more--it had been sold to a Japanese competitor who apparently was on the cutting edge for the product.  Which leads a stinker like me to wonder why the company needed subsidized financing at all unless.........and of course this could NEVER happen in the EU that someone dropped a dime to inquire about the availability of cheap financing if the going broke company in the declining city might negotiate a sale of itself to a White  Could it?  Nah.  So why should I be suspicious?  I'm a troubled person, I really am.

Anyway, it's nice to see that stateism  is alive and well in all corners of the EU.  What would we do without it?  And perhaps we can learn.  Take Solyndra for example.  Governments...even central bankers are not real good at picking winners.  Not even graduates of the Goldman Sachs School of Crony Capitalism like brother Mario but he's better than most I guess.  It was better when all these guys and gals needed to do their jobs was a can of Raid.  When I was very young.

Have a great weekend.

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