But the most amazing thing happened the next day on August 3. What the Financial Times had originally called “Draghi’s Blunder” was now written up as “Draghi’s Bold Move”. Every talking head and person of media influence (what game theory calls Missionaries) with access to the ECB or a European central bank started reading from the same playbook (“Mario is a genius”, “markets got it wrong”, etc.). I thought my head would explode if I heard the word “bold” one more time. Combine this with the European Plunge Protection Team buying up every risk asset in sight at the opening bell, and the rest, as they say, was history. European (and global) markets rocked on in risk-on mode for months … years, really, if you focus on Eurozone sovereign rates. It’s the purest example of Narrative creation and the Common Knowledge Game in action that I know, and was in many ways the spark for my starting Epsilon Theory.
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