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Haka Politics and the Slow Crawl

January 16, 2013

We seem to be in an era where financial or monetary policy is all. And markets react only to that. The politics has become scarcely relevant. Entertaining. Loud. Intimidating. But markets keep moving. The dogs bark the caravan rides on.
-Christian W. Thwaites, president and CEO, Sentinel

In the last few months we have seen the rise of Haka politics.

Familiar to any All Blacks fan, this is the ritualistic Maori war dance, full

of noise, bluster and theater. But it rarely intimidates and most opponents sit it out with some amusement. So it is with the political interventions last year. We saw countless announcements and intentions from EU leaders and solemn pledges with little follow-through. And in the US we had a soporific election and a squalid squabble over the fiscal cliff that caught the public

but not the market’s attention. We seem to be in an era where financial or monetary policy is all. And markets react only to that. The politics has become scarcely relevant. Entertaining. Loud. Intimidating. But markets keep moving. The dogs bark the caravan rides on.

Why? Well the US and European economies, together about 43% of world GDP, are driven by powerful and independent central banks that are managing the debt, demand and growth drivers as best they can. And doing a fine job. We will look back at the Bernanke and Draghi tenures as periods of deft navigation. These are no Arthur Burns or Montagu Normans. Each has a close read of the economy’s drivers. In the US, the Fed has introduced new monetary policy measures to backfill demand crushed by a balance sheet recession and atavistic fiscal policy. In Europe, the ECB [1] too has policies which are a picture of clarity compared to the Pollock-like logic

in austerity we heard from EU leaders. As we’ve noted before: cometh the hour, cometh the man.

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