ECB, ‘No problem’

As fund managers we sift through a huge amount of information, in the desire for finding good and avoiding bad investments. Writing these blogs entails a further distilling of these ideas into a single point.

One of the things we do regularly is to listen to the ECB press conference, held following their rate decision. Most of this is the usual mix of diplomatic, repetitive, and instructive dialogue you would expect to hear.
What we look for beyond this is the subtext, the trend, or the offguard comment. Occasionally we get something different. This is when a question penetrates the cool facade and the answer given reveals the real issues.

Such an event occurred this week. One journalist asked if the ECB was concerned about having a balance sheet containing Greek and other sovereign debt that might not be money good. A good question. The answer came back short and sweet from Trichet, “No problem”.

No problem

Usually an economist would happily expound on this and explain why it was no problem. Instead he moved swiftly on.

Now either it is simply at one extreme no problem and so obvious the question was plainly beyond contempt, or at the other extreme something that needs to be swept under the carpet.

No problem

Don’t think so.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Richard Woolnough

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