A really quick one. Angela Merkel has noisily crossed the line separating politicians from central bankers:

"I am very sceptical about the extent of the Fed’s actions and the way the Bank of England has carved its own little line in Europe"

As Mark Thoma reports, the blogosphere reaction is quite harsh. Tony Barber thinks this proves how Germany is finally an ordinary country.  And fortunately the ECB knows how to stick up for itself.   But will the Fed? Their perpetually angry Congressmen want more control over the US central bank.  Bernanke on the other hand sees the unorthodox steps taken since the crisis as part of his armoury:

"Mr Bernanke has said he views the Fed’s loan and asset purchase programmes as an extension of core monetary policy in extreme circumstances – a strategy he calls “credit easing”.

This was our view expressed last autumn. An era of deflation and unorthodox behaviour means we need more, not less independence for the Bank of England (we elaborated with a Guardian comment piece). 

I originally worried that our paper pushed too easy a line - preserve Bank independence- which only left wing romatntics could question.  I clearly had no need to.  As QE is undone and the fiscal deficits stare governments in the face, central bank independence will be every more precious and under threat.

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PS.  Ros Altmann, a perpetual defender of savers' interests, has weighed into the Wolf-Ferguson debate (see last post) and this one too, saying the QE is overdone.

"The rise in government bond yields does not prove policy is “working”. It proves that policy is overdone. The markets are waking up to the enormous size of the sums involved in recent panic policy easing and they don't like what they see."

Um, if they reversed QE now - i.e. sold £100bn of long bonds, what do they think that would do to bond yields?  People are amazingly self-serving in interpreting market data, is the only robust conclusion you can draw here.   Dr Altman, in fact, even thought the lower interest rates used earlier were unjustified  - here is an object lesson in the mistakes you make if you think economic decisions should be deconstructed into simpleminded moral statements:

"There seems a real injustice here, as money is taken from older savers who behaved responsibly, to be given to younger borrowers and to the banks – the very groups who caused the problems in the first place."

If rates were kept high, at 3-4% say during a period of real deflation (and hence real rates were 5-6%), then the collapse in real demand in the economy would have muellered everyone, 'blameless' or not.