Final Word from Monday, September 24, 2018

Miloš Zeman told German investors last week that he fears another global economic crisis and that it is always the foolishness of politicians and bankers that causes them. He didn't say whether he meant commercial bankers, central bankers, or both, but he was initially one of the biggest critics of the Great Devaluation of the Czech Crown on Nov. 7, 2013. The devaluation was a mistake that hurt the country, he argued. His criticism didn't abate until after he appointed his own man, Jiří Rusnok, as the CNB governor in mid-2016. Under Rusnok, the CNB is now going to the other extreme by trying to revalue the crown through interest-rate hikes and is doing it just as talk of another global crisis becomes de rigueur. A combination of higher interest rates and a global turndown could be even more devastating for many Czech households than the devaluation that Zeman so criticized. Zeman needs to have a sit-down about this "foolishness" with his own central-bank governor. [ Czech Republic intervention Czech National Bank devalue revaluation ]