Perfect Timing, For A Possible Repeat, Anyway

To paraphrase the great man Michael Scott: I’m not superstitious but I’m a little stitious. Something like premature celebration, or not counting chickens before the embryos finish their time in their eggs. Don’t spike the ball at 5 yard line (let alone the 30).

In January 2014, Central Banking magazine handed out its first annual awards. After a tumultuous few years around the world, the initial honorees seemed to make a lot of sense. With growth projected to be on the rise, a full recovery after the awful and troubling experience of 2011’s false down, the official world began to hand out kudos.

First up, Mario Draghi was presented Governor of the Year after it sure seemed like his July 2012 promise to “do whatever it takes” had saved the euro (and more).

For Central Bank of the Year, that honor went to the People’s Bank of China. I recalled the eerily prescient (in a reverse kind of way) setup a few years ago:

If Draghi was league MVP, the PBOC was its champion apparently. In a very narrow sense, it might have seemed fitting given the struggles Chinese money markets went through in 2013. That summer was as eventful in SHIBOR as US tba MBS, if not more so.

Twenty-thirteen was an upsetting time for much of the world, including a currency crisis around the emerging market portion of it. The Chinese, so far as CNY had been concerned, ended the year apparently in good shape. The economy was strong, or so it was said, while the currency hadn’t been volatile like so many of its peers.

Within months, Mario Draghi’s ECB (June 2014) would start flailing with targeted LTRO’s and even negative interest rates (NIRP) – for reasons he never could adequately explain. Europe’s bond market did it for him, which made his eventual choice of QE (March 2015) all the more curious since interest rates were already declining, and had substantially declined, long before he started buying anything.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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