2012-01-01

It's just too quiet

Anybody else noticed the stream of Eurozone news and policy announcements over the past two weeks?

No, me neither.

In my experience, a prolonged period of silence doesn't indicate that nothing is happening; quite the opposite. I'd bet that the Eurozone governments and banks have been beavering away like crazy at something big. Since there haven't been any obvious leaks, this must involve relatively few people and hence be at a very high level (prime minister and finance minister level).

The few hints I've seen in the news have been around the topic of capital controls which would fit; if you want to impose capital controls in the Eurozone it's going to need to be a big bang, which means serious planning. It's going to be the only way to stop all the Euros flowing out of the PIIGS and into Germany, and the only way that the UK is going to be able to hold sterling down if the Euro implodes and all the Euromoney looks for a safe haven.

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