One of the many things not currently priced into debt markets is the possibility that central bankers who have recently won independence in monetary policy could lose it if a policy blunder gave the politicians an excuse to grab back the monetary role. That thought is prompted by the Bank of Japan's decision to keep rates unchanged last week after heavy lobbying by the government. Whether this was a case of giving in to pressure or not, it underlines the point that central bank independence is conditional.

Equally striking is how much trust the markets now place in central bankers' judgment. The Bank of England's Mervyn King has been known to hint that excessive confidence may be being placed in these elite public servants. Central bankers have, of course, a vested interest in encouraging caution in markets since they are required to promote financial stability. Encouraging it by casting doubt on their own competence is a novel way to do this. But I think Mr King has a point. A doctrine of central bank infallibility is probably not good for financial stability because it encourages complacency of the kind that has sent the credit markets into denial about risk.