Party pooper Mervyn King won't let us get carried away
No sooner had the group of six central banks given their commercial peers the kind of boost they haven't enjoyed since the days when leveraging was all the rage, than the goverNor of the Bank of England turns the music off and the lights on at the celebratory party.
The move by the group of central banks to free up the flow of money has been welcomed, not least by the dollar-strapped European banks who had been searching down the back of the sofa for loose dimes, cents and quarters to pay back their US investors. CEOs were swinging from the rafters, traders dancing on tables.
But then Threadneedle Street's top man, presenting his twice yearly doctor's report on the health of the economy, goes and ruins it all by talking of the "exceptionally threatening" environment posed by the eurozone crisis. No chance of anyone getting carried away there, Merv.He wants the UK's banks to raise even more capital so they're in a stronger position to deal with any further volatility, even though they're sitting pretty compared to their European peers.
This suggests Mervyn King is a worried man, and if Merv's worried, we should all be worried.
It's unlikely he'd advise his flock to take a less profitable route at such a critical time unless he was onto something. He could just be overly cautious but it's unlikely he'd want to get in the way of profit.
So while central bank supergroup's move has been welcomed, don't be getting carried away just yet.