Draghi gets out the dragster

Remember 'Whatever it takes' ? Well it's back.  The European Central Bank is to put its foot on the gas. Markets were thrilled on Thursday to hear Mario Draghi announce his programme to 'provide a backstop to remove tail risk from the Euro area.' Tail risk is that dreaded part of the probability curve that is too large for comfort. Tail risk is what hit financial assets after the collapse of Lehman Bros in 2008, creating price movements that weren't statistically possible, or only once every few million years, somewhat longer than the existence of civilised humanity, let alone financial markets. And the same tail risk has threatened to erupt from the Eurozone ever since. Several bouts of frightening volatility have occurred continually, forcing many investors to seek the safest possible havens for their cash. Interestingly, though, the volatility spikes have been declining. This could mean two things: one, investors are learning to live with the dangers, which could be a form of 'disaster myopia' where people simply cease to be able to imagine a major meltdown; two, the perception that Euro policy-makers are gradually getting a grip on things. It's probably a bit of both. One of the first beneficiaries of Draghi's largesse may be Portugal which is putting the finishing touches to yet another bout of austerity. It's already in a bail-out programme and its determination to comply could well receive the ECB's blessing. You might make some money in Portuguese bonds if the yields track down to the levels of Ireland and Spain, or lower. The QSL is from Rádio Renascença a 10 kW station operating on AM from Coimbra, Portugal, heard in Kent in 1999.