The Daily Nugget: August 2, 2012

So, the highlight of yesterday? No, not Bernanke’s press conference… Team GB winning their first batch of gold medals!

It might seem as though there are more important things at the moment to worry about than the medal tables, but at least that’s good, honest stuff; people working their hardest and putting their all in to win a good clean race.

Of course there has been the Olympics’ fair share of scandals this year – namely the badminton scandal. But those individuals were caught cheating and thrown out of the competition and now face an investigation.

If only central banking worked like sports. If only Bernanke and his friends were prepared to admit when they were defeated and stop playing the game.

If only the markets would wake up to the fact that the central bankers are cheating and stop playing along with them.

Bernanke and the FOMC kept everyone guessing yesterday as they hinted at but did not confirm further QE. Of course, what with the elections coming up and the pessimistic statement from Bernanke yesterday, we know that the next round is not too far around the corner.

Bernanke, as predicted yesterday, did commit to holding interest rates at "exceptionally low levels" until at least late 2014. So the markets didn’t need to worry too much, but the Fed are just using another tactic to screw everyone over and devalue their cash.

Whilst the Dow closed 32.5 points lower after the decision, and gold was down as well, the markets remained relatively calm after both the Fed’s announcement and the PMI data release. It seems markets are more anxious to see what happens today with the ECB.

Today we have monetary policy announcements from both the BoE and ECB to look forward to. We expect to see no change from the BoE’s current stance, adopting a "wait and see" approach. But what does it all mean really? Neither Sir Mervyn nor Draghi are going to put their hands up and admit that despite all the cheating they can’t win at this game. Draghi is palpably desperate to start printing money and just join our own Guvnor and Bernanke in the hole they’ve dug for themselves.

We watch the ECB announcement with interest. Draghi’s promise to "do whatever it takes" gave high hopes to investors but the more we think about it the more it seems like a bluff. He’ll want to do something, though, given yesterday’s shocking PMI figures, particularly from Germany.

And we finish on the Olympics once again, which has apparently disappointed many economists who had hoped it would give the UK a boost out its deep recession. But it has done the opposite and in fact has overall, reduced the levels of activity in the economy. And there we all were thinking an extended sports day was the answer to our problems…