Its Serious

I heard Ollie, the Spad from The Thick Of It, on breakfast time TV talking about how what he regarded  as silly comic ideas that went out in the series suddenly appeared as 'new political initiatives'. He cited the idea of a national database of spare rooms as one which was trialled on the Tick of It which has now emerged as a government proposal.

I switched on A F Neil's Daily Politics at lunch time to find my former Bank of England colleague Matthew Hancock MP on with Lib Dem MEP Sharon Bowles to discuss the Eurozone crisis. Its serious said Matthew to be followed up by at least a dozen repetitions of the same phrase with accompanying chorus of its serious from La Bowles.Indeed the its serious comment was all a pissed off Andrew Neil could get out of him. This discussion first took place in a Yes Minister episode with Jim Hacker and I think banker Sir Desmond Glazebrook who managed to keep a 5 minute scene going just using the its serious phrase.

Politics does indeed follow fiction. I suspect the reason for Matthew's confusion is that his old boss Wee George has not a clue what to do about this crisis and Matthew did not want to stick his neck out.  Ms Bowles was quite sensible for a LibDem.

Meanwhile back on the markets Italy raised 5bn € at 6.06% in a twice covered one year bill auction today, double the rate they paid only a month ago. This will have to be repeated again in 12 months time. This auction was of course carefully stage managed to ensure it was not a complete disaster, i opine most of the issue will be sold to the ECB within one week to join the 120bn€ + of BTPs the ECB already has on its books. Merkel's objection to the ECB buying outright BTPs is purely for domestic political consumption. The ECB has been buying Italian bonds in the secondary market each week for the last 6 months and will continue to do so indefinitely.

Ten year bond yields tonight were Italy 6.95%, France 3.47%, UK 2.23%. I don't understand why Gilt yields are so low. It can't last.  The ECB will be in the market tomorrow buying BTPs in an effort to keep the yield below the psychologically important 7%. They got a bad fright yesterday.