12 august 2017, this was (and still is) the day...

Saturday, August 12th, 2017

Ten years and a few days ago, I went to work to find we (the european central bank) had injected a staggering 95 billion euros into the money market, after overnight lending rates shot up (due to bnp paribas freezing funds over american sub-prime mortgages). After being at it since 3am, an excellent colleague composed a great email to everyone explaining this was not the ecb giving away money but lending it to ensure no-one ran out, i.e. monetary policy. As in the normal run of things, it said, we'd soon be bringing it all back. After ten years of lowest-ever interest global rates and quantative easing, in spades for the uk, that deal is still not closed. A few days later, came the run on northern rock, and a year after that the credit crunch after the us decided to stop the policy of saving the banks and let lehman brothers fall. Less bank lending led to less investment led to less consumer spending (the twin peaks of economic growth) and so the crisis hit the streets and began affecting people's lives in various forms, including the resulting wave of fiscal contraction policy, the austerity still with us. It is no coincidence that during that period we saw the rise of nationalism and populism across europe and the west (see 26 march 2011, let's ignore the rise of the right). Whilst it existed before, this was the time it took wing and grew into the mainstream in more and more countries, resulting today in trump and of course brexit. It is ironic that the market that rescued britain from being the sick man of europe and is its greatest chance of increasing prosperity became the lighting rod issue for disaffection, anti-elitism and inequality, but that's democracy for you. Meanwhile I am still trying to read the runes of resistance to see if the tide has properly begun to turn, as those same banks all start setting up various headquarters outside london (dublin seems to be doing rather well) and the same ecb renews its battle to get euro clearing out of london too, on which it places a great deal of importance (as a globally-unprecedented 98% of all euro transactions are cleared outside the central bank's jurisdiction). Going forward britain, not being a member, won't be able to argue its case at the eu's court of justice as it did successfully last time. Oh well, another 900 billion a day (and 100, 000 jobs) out of the window. Gonzalez-paramo's "dark cloud" hasn't lifted yet.