For the past few years, the central bankers of the world have operated like one big fraternal order by deliberately partaking in a variety of activities including regular conversations, frequent meetings, the uncovering of the latest family secrets, and the process of banding together in order to preserve their historical traditions.
As long as everything seemed to be under control in each Brother’s Lodge (country), the spirit of sharing and total cooperation was not only implied, it was also expected. When ruinous flare-ups occurred, all of the membership could be counted on to pitch in and quell the problem, and subsequently revert to a Friday night party for more of the same.
When ECB President Mario Draghi made his infamous announcement of, “Whatever it takes,” he knew for certain that his back was covered by the rest of the Brotherhood, including Brother Ben Bernanke. If it was liquidity that was needed, Brother Mario was absolutely positive that the money spigot would be fully opened with the QEs of the world being directed his way, not the least of which was the $85 billion monthly purchase of U.S. Treasury bonds enacted by our very own Federal Reserve. If Brother Draghi requested a little jawboning, he would be guaranteed that Brother Ben, among others, would take to the podium and broadcast over the airwaves to proclaim “it’s all under control.” (Pay attention now — I know Brother Ben notoriously said it in the past regarding subprime mortgages, but this time it‘s different.)
Whenever an important issue arose, from Athens to Nicosia and from Tokyo to Paris, the Brothers would always remember their fraternal pledge and come to each other’s aid. And since their own problems had been taken off the front page of the newspaper, they could all continue to recite the famous line written by Alexandre Dumas, “all for one, and one for all.” Indeed, their behavior became quite predictable — the phone would ring, the call would be answered immediately, and the boys whipped into action with everyone intensely focused on that one area of concern.
However, it seems that nowadays the Lodge’s problems have continued to multiply and the response time for group assistance has slowed dramatically. After all, each Brother has now started to worry about his own separate order.
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