“There was a saying: 'Don't fight the Fed.' Well now it's 'don't fight Draghi'. It remains to be seen whether the markets will question this new saying.” The harbinger of speculation comes from Richard W. Fisher, chairman of the Federal Reserve of Dallas, speaking today at the conference "The impact of US monetary policy on the Eurozone" organized in Rome by the Institute of International Affairs.
Always an enemy of the ultra-expansionary policy inaugurated by Ben Bernanke and continued by Janet Yellen, Fisher – in office since 2005 and destined to leave his post next April – is one of the hawks who populate the meetings of the Federal open market committee (FOMC) , the main decision-making body of the American Central Institute.
His concern "is not inflation", but "the very effectiveness of this monetary policy", which risks reviving old problems on both sides of the Atlantic. Most of the enormous liquidity injected into the system thanks to the policies of the central banks, in fact, has not reached the real economy and at this point - according to Fisher - risks turning back into speculation.
“One cannot think that this will go on forever – says the banker -. The markets will test the ECB” to verify the commitment made by Mario Draghi at the peak of the crisis, when the number one of the Eurotower assured that he would do “everything necessary” to protect the euro.
On the US side, however, Fisher argues that Fed policy has fueled a financial boom that could create bubbles in some areas, as he shows "the very high risk that we are starting to see in the junk bond market today”. This is why the number one of the Texan Fed looks forward to the rate hike: “The market thinks we'll start between spring and summer – he recalls -. I don't want to reveal our internal talks, but I reiterate that personally I would prefer sooner rather than later ”.
The effects on Europe, in any case, will be both positive and negative, because, according to Fisher's forecasts, "on the one hand the euro will be able to depreciate, on the other a flow of European capital will be activated towards the United States which could have destructive consequences on financial markets of the Eurozone, because the capital to support them could run out”.
On the other hand, Fisher agrees with Draghi on a fundamental point: “There is too much focus on central bank activity, which is necessary but not sufficient to trigger a real recovery”. The central problem, therefore, is of a political nature.
Along the same lines Enrico Tommaso Cucchiani, who - during the same conference - underlined a fundamental imbalance: "Between 2011 and 2014 the Italian spread fell from 550 to 130 points - recalls the former CEO of Intesa Sanpaolo, speaking in public for the first time after the resignation from the largest Italian bank -. But how has the economy developed since then? GDP has lost about 4 percentage points, the debt-GDP ratio has risen from 125 to 135% and youth unemployment has reached unacceptable peaks of nearly 40%”.
Faced with these data, “many politicians believe that the only solution is to cut rates and increase flexibility – continues Cucchiani -, but I don't agree. Italy's problems are others, above all low competitiveness, the intrusiveness of the state, inefficient bureaucracy and low-level training in key sectors”. In short, “now more than the central banks it is up to the governments to do their part. And when they are looking for models to write reforms they would do better to look beyond the borders of Europe”.
