Tricky times for central banks.

(From Financial News (Daily))

Central bankers have ducked a vital question for far too long, yet it has never been more relevant or pressing than it is today: to what extent are they responsible for financial asset prices?Top central bankers have been gathering over the weekend in Washington for the annual UN/World Bank jamboree. But already chilly autumnal winds are disrupting the financial scene.

The Bank of Japan has controversially promised to buy equities from its troubled banking system, no doubt timing its announcement to help the banks past their tricky half-yearly balance sheet date on September 30.

But Europe also faces a serious crisis, with German share prices down 40% this year, enough to plunge the insurance industry into big solvency problems. Fortunately, European banks are rarely substantial investors in equities, but the consequences for bad debts in the corporate sector cannot be …