“This is the Way” to Lehman, bubbles, or MMT
It started with a key Tory official arguing not with the EU, but markets (“Tory Peer Lord Frost Doesn’t Think ‘Anything Has Gone Wrong’ As Pound Touches Record Low: The former chief Brexit negotiator dismisses market turmoil since the mini-budget as “unwarranted” and an “over-reaction) while Tory supporters argued on social media with the IMF (“Embarrassed for the IMF. This is the IMF self-declaring as a left-wing body. The UK should now withhold its IMF contributions.”)
“There is desirable treasure, And oil in the dwelling of the wise,
But a foolish man squanders it.” Proverbs 21:20
There were rumors, long heard on the Street, that Janet Yellen is out as Treasury Secretary after the mid-term elections. Who, without a key role at present, has been all over the press talking about the need for higher rates? Larry Summers. So who is next in line, perhaps? What a shock for markets that would be. From someone who once ran the Fed to someone who wanted to run the Fed. How apt given the increased link-up between fiscal and monetary policy.
While GBP was around 1.07, EUR was at 0.9550, CNY at 7.23, AUD below 0.64, and NZD lower than it’s Covid trough. In bonds, Europe –which sadly cannot keep burning Angela Merkel’s reputation for heat forever– heard the ECB’s Holzmann hold up the UK up as an example of how he would carry out QT – like ripping a plaster off a wound.
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