Slang is fascinating. A bottom-up generated change in language reflects a substantial forming or modification of outlook. I'm surprised we don't have chairs in Slang at the new universities. I write this as I found this week two new slang terms for the Germans, both words born of common parents here in the trans-Alpine region. The first is Italian. Tudro is not a kind word; it means oafish, unimaginative, lacking feeling or sensibility and is pure Italian. The second is from the British army stationed in southern Austria at the war's end, guarding hundreds of thousands of broken, dispirited, rumpled, at-heel German troops. A score could be herded by one man with a loosely carried Lee-Enfield. They were no longer Huns, Krauts or Jerries - the swagger, the insolence, the arrogance had been beaten out of them in battle. So for their British guards they became Teds, from the Italian Tedeschi. I like Teds.
With the news agenda swinging round like an oil tanker at bow-anchor to Italy, AEP starts the move with a piece in the Telegraph (£) on how the new Italian government's finance proposals have 'enraged' the Teds. It's all about Target 2, or T2 as we shall say. There are some useful papers on T2 about - Here from FT Alphaville, and Here from Forbes, if, like me you need a crash course. I suspect over the next year we'll all be hearing a lot more about T2 in the news. The headline is that the Bundesbank is owed nearly a trillion Euros by the rest of the Eurozone, whilst Spain and Italy have heavy T2 debts. Martin Selmayr is turning his death-gaze from West to South. A couple of interesting points, if I've read the briefings right -
- National banks are given an allocation of Euros to print. Printing more than the allocation creates a debit with the ECB. Germany's Bundesbank has been printing hundreds of billions of excess Euros possibly to offset their trillion-Euro T2 credit with the ECB
- QE money created by the Bank of Italy has been substantially invested by the Italian market in, erm, Germany, substantially increasing Italy's T2 liability and Germany's T2 credit
- Germany's huge T2 credit now forms by far the biggest asset of the Bundesbank, having overtaken in the early noughties the previous biggest Bundesbank assets of loans to German banks.
- Germany is not quite alone in having a substantial T2 credit; the Netherlands and Luxembourg are also in the creditors club. So expect some commensurate alignments.
Right. Off to the Herrenfriseur, then.