ECB´s declaration to buy any bond on secondary market or Dragi´s “whatever it costs” is still strongly rooted in the minds of investors. Otherwise it will not be so positive for Italy which is again in some political crisis once the Prime Minister Mr. Letta has declared that he is prepared to resign. But Italians bonds have dropped at their lowest levels since 2006. Mr. Letta should be replaced by Mr. Renzi and markets believe that he will be able to set up a new government.

But not so fast with overestimate of the ECB´s the powers. Last week we informed you about the decision of German Constitutional Court about the OMT program prepared by ECB. It seemed last week that the GCG has skipped the final decision to European Court of Justice but some German’s analysts claimed that the decision creates some uncertainty because it could happened that the GCC could forbid Germany to participate on saving Euro at any costs or could force German government in some cases to leave Eurozone and that the decision cannot be ignored by government and other public institutions as Bundesbank.

Stress tests do not start yet and there is some information which could be for some European banks very sensitive. The new chair of the Supervisory Board of the European Central Bank Daniele Nouy said that “We have to accept that some banks have no future.” She has meant by that exactly what you think. Some banks must be left to die or bankrupt. She also said that “I do not have any idea of how many banks have to fail. What I know is that we want to have the highest level of quality”. Highest level of quality is the best benchmark and we have only to hope for the best because the last time the best quality was Dexia as well which had to be rescued a while after it passed by last stress tests.

Recovery is sometimes very interesting. One could think about it as better economic conditions for general public but it seems to be opposite. Especially, if you take as an example so called Greecovery.  As national statistical bureau has shown Greek unemployment rose to a record high (28%) in November. It means that the number of people unemployed rose to 1.382 million. The Greek youth unemployment rate soared to 61.4 % which means a new record as well.

We were a little bit concern about the future of China´s financial system at the end of January because of possible default of one the Wealth Management Products (WMP) which lost 0.5 bln. USD. But it was saved two days before the deadline to repay investments. An if you think there is everything alright right now in China you have to be aware of the fact that Chinese coal companies are trading near or below book value because of low prices of their products. The problem is that many of them have loans to finance their operations which are used as collateral in some high yield financial products. One of them which raised approximately 47 million USD from wealthy clients technically defaulted on February 7th once it could not return funds to investors. I think that to monitor shadow banking system in China would be worth for everybody because the crisis trigger could come from this area anytime.

A little bit unexpectedly but the US House approves rising debt limit without any condition till March 2015 and technically ended two years discussions about conditions, saving and public finance consolidation. The vote was definitely a victory for President Obama, Democrats and those Senate Republicans who have argued that spending money for previously incurred obligations was essential for the financial standing of the federal government.