There’s a shortcut to figuring out whether a central bank has pushed too hard or not hard enough. All you need is a trendline.
In her first month as President of the ECB, Christine Lagarde is having to fight off a coup. Other European central bankers want her to give them a greater say in how monetary policy is set. There are three reasons why Lagarde needs to win.
The establishment believes banks are different and treats them differently. This is not a cyclical and temporary issue; it is structural and permanent. A universal reality confirmed by the recent travails of Deutsche Bank.
Nixon lives on. The bulge of credit, debt and danger has simply been shunted into the shadows of leveraged loans, junk bonds, emerging market debt and myriad other dim crevices.
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