€urocentric Blog: The Monetary Front - Eurocentric - Silvia Wadhwa

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Oct.02

3:43 PM ET

Thursday, 2 Oct 2008

A Report from the Monetary Front

Posted By:Silvia Wadhwa

Ok, I could write about WHAT exactly ECB President Jean-Claude Trichet said or didn´t say at today´s press briefing following the expected "rates on hold" from the Euro tower ...

How he "doved down" his rhetoric on inflation and how he expressed decidedly more concern about the slowdown in the economy in Euroland ...

How he stressed the "extraordinarily high level of uncertainty" from the ever deepening financial crisis. ...

How he side-swiped at the unions - not least of all engineering union IG Metall in Germany - for their present wage demands (8 percent plus) and called on players in financial markets to "show more composure" ...

(Watch Silvia Wadhwa's full interview with Trichet above and click here to watch reaction from Adam Cole, Head of Currency Strategy at RBC).

ALL that in itself was definitely interesting and unexpected enough. - And believe you me, after a quarter century reporting about monetary policy (from Plaza to Louvre, from '87 crash through many an ERM crisis and tribulation in the '90s up to today!), yours truly - i.e. ME! - does not get surprised so easily.

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But while the distinctly changed rhetoric of JC Trichet was in itself more than surprising, what REALLY rattled me was more the almost tangible sense of urgency in what Trichet said and how he said it. And - not least of all - that he seems to be eager to communicate to the press, especially to us TV hacks all of a sudden ...

Even before the press briefing, his PA was rounding up some of the key broadcasters present and offering quick "exclusive" interviews with the usually very elusive tv interviewee ... I for one have never experienced THAT before in the history of the ECB.

What was said in our interview in the end (and the couple of ones with German television I have seen) was not so different from what we heard in the press conference before. Which led me to believe that the fact that these interviews had happened and were sprinkled across the television news was the real message — more than the content.

There can be little doubt that the degree of exasperation among central bankers - especially at the ECB - is increasing ... As we were waiting for our interview, Trichet was pacing up and down, always on the cell phone, always in motion ...

Last week, I talked to ECB councellor Erkki Liikanen in Finland and he expressed, cameras turned off, what maybe his president could NOT quite bring himself to say with the cameras running:

-There is no rule book any more.
-We've long thrown away any rule books.
-What we are experiencing now has never happened before in our lifetime - if ever.
-We try something and hope it works. If it doesn't, we try something else.

Don't nail me down on THAT having been verbatim, but close enough.

So where does that leave us?

THERE ARE NO MORE RULES.

Are there any solutions?

Well, if Trichet & Co. don't really know, if the Fed doesn't really know — what are we left with?

Here's an idea:

-Bankers with stronger nerves?
-Bankers who actually make a point of knowing what's in their books?
-Bankers who are COMPETENT?

Ok, ok, I am an optimist at heart ... LOL!

Ciao for now.

-Silvia

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