Last week I rashly proposed a four-fold classification of Fed-watchers between Conspiracy Cynics, Incompetence Cynics, Selectively Naïve and Deluded Naïve, which met with a gratifying favourable reception from readers. Emboldened, I put forward this week a three-fold classification of all central bankers between Deluded, Baffled and Realistic. This may sound mischievous but it is meant to highlight the dark side of the common acceptance that global markets are now driven by the actions of less than 50 people, many of whom appear to be out of their depth.

The ten members of the FOMC were centre-stage last week and through the combination of their economic projections, post-meeting statement and press conference managed to display sufficient ambiguity to spark a rally in global equities and US Treasuries while sending the dollar into reverse. To be fair, probably only William Dudley and Charles Evans are candidates for the deluded classification while the three other regional Fed presidents seem to feel able to talk about raising rates sooner than later. However, Janet Yellen and her four fellow Board Governors still appear unable to move on from the orthodoxy of the Bernanke regime, despite its clearly not working.

The label 'deluded' seems especially appropriate to attach to Haruhiko Kuroda and the majority of his BoJ monetary policy colleagues who persist with QE and ZIRP (zero-interest rate policy) despite the conspicuous lack of evidence that they have boosted either growth or inflation in Japan. However, even he has most recently shown some signs of disagreement with the Abe government's wishful thinking. Also seemingly deluded is Mario Draghi in his mission to re-ignite the EZ economy along the way to effecting political union. While a majority of the ECB governing council clearly agree with Mr Draghi he also faces determined opposition led by Bundesbank President Weidmann, who, in this matter at least, speaks with the voice of reason. In contrast, the PBoC's Zhou Xiaochuan is something of a realist in terms of resisting ZIRP and currency depreciation despite political pressure from the top CP leadership.

Vanity rather than delusion may have characterised hitherto Governor Mark Carney's various attempts to appear in charge of the UK economy and, indeed, the MPC has sensibly declined to cut Base Rate below 0.5% or to increase QE. However, most recently there have been signs within the Bank of England of at least some support for further easing. Last week's speech from Chief Economist Andy Haldane looked suspiciously like kite-flying for one or more Base Rate cuts and the topic has also appeared in recent MPC minutes.

The increasingly awkward reality for central bankers is that QE and ZIRP may well have saved the US housing and UK gilt markets but have not done much since other than release a flood of liquidity in and, in the case of Emerging Markets and commodities, out of speculative punts around the globe. Hot money flows seem unlikely to stop sloshing hither and thither unless either the central banks stop easing (a decision apparently still being ducked by the FOMC) or investors decide enough is enough. Since the turn of the year there have been signs of growing unease amongst investors in US equities but EZ, Japanese and (domestic) Chinese markets are running hotter than ever and even the UK looks is joining the party. Meanwhile, dollar (and sterling) bond investors and issuers have understandably given up waiting for higher official rates and something little short of a speculative frenzy has broken out in European bonds. Never known to miss out on speculation, the currency market has been re-energised by various central banks' attempts to depreciate their own currencies. In fact, the main and blatant purpose of the ECB and BoJ's QE programmes is to devalue the euro and yen in order to stimulate exports.

This week there are no formal decisions from the major central banks but there are plenty of speeches for the more nervous bulls to fret over, including Mr Draghi on Monday, various FOMC participants through the week and Dr Yellen and Mr Carney on Friday. For now, the realists amongst central bankers are in the minority despite the obvious futility of using monetary policy to stimulate demand at a time when so many consumers are worrying about their jobs or are unemployed, when public and private debt levels are already elevated, when trade is buffeted by competitive currency devaluations and when so many companies prefer share buybacks to new investment. It seems that whether out of delusion or bafflement many central bankers have (to borrow from poet Stevie Smith) 'gone further out than you thought and' (soon may be) 'drowning not waving'.

Grexit looms ever closer

It looks as if Greece is finally on the point of running out of money after punctiliously making IMF repayments, refinancing maturing T-bills and paying pensions and public sector salaries. Twelfth hour relief is being granted by the ECB on loans to Greek banks and the EMU bigwigs have agreed to release an advance of €2bn out of final €7.2bn of bail-out money with the cover of humanitarian aid (which will not go down well in the poorer member countries) . However, it is very likely that even the full €7.2bn would soon be used up as public finances go back into the red.

It is hard not to think that the Syriza government and the Northern block are circling like judo wrestlers, waiting for the other to make a mistake.  Mr Tsipras may have a mandate to stand up to the rest of the EMU over austerity but he has also pledged to stick with euro. The CDU and CSU members of the ruling coalition in Germany (and a majority of voters, according to opinion polls) appear to have run out of patience with Greece but the SPD are still dragging their feet. However, the French, after being initially supportive, now seem to be taking a harder line and the Spanish are becoming increasingly hostile to Syriza. This leaves the arch-federalists led by Messrs Juncker and Draghi with an agonising choice: to try to bully Greece to appease the other countries or to find a fudge that holds the EMU together (until the next fudge). The fear is that Grexit would reveal the reality that the EMU is little more than a fixed exchange mechanism (for which further confirmation is Austria's refusal to compensate German and other creditors of the failed Hypo Alp Adria Bank).

Mr Tsipras has his Grexit pretext ready in the form of huge war reparations while Mrs Merkel may be happy to risk an EZ break-up in case the elections in Spain (2015) and France (2017) look like resulting in new anti-EMU governments. They meet in Berlin on Monday and even the expert game theorist expert Yanis Varoufakis may not be able to forecast the outcome.

Economic data coming up this week

After a string of softer numbers, including Industrial Production last week, an edginess is creeping into the comments on US numbers. This week's reports include the Housing market, Durable Goods Orders and the increasingly recognised Markit PMI surveys. Another month of negative CPI inflation and further erratic revisions of Q3 and Q4 GDP would add to the tension.

The main interest in the flash Manufacturing PMI surveys from China and Japan will be how close they are to the 50 contraction-expansion break-even mark. Flash PMIs from Germany and France may offer some more evidence of the recovery Mr Draghi claims is already underway. However, EMU-wide Consumer Confidence, French and (IFO) German Business Climate and Italian Retail Sales are likely to show 'animal spirits' remain subdued

In the UK, the CPI could well have become negative in February year on year but, if not, is highly likely for March. There is still massive deflation in PPI Input prices (mainly oil) to feed through. Retail Sales should perk up after a disappointing January but CBI Industrial Orders will do well to hold up. As the election approaches, the politicians will be looking even more closely at Gfk Consumer Confidence, which has been unusually positive in 2015 so far.

All in all, equities may have another buoyant week but this will not be supported by underlying data. Profit-taking may hold the dollar back again but give oil prices a bounce. Grexit talk may rattle investors in peripheral EZ sovereign bonds.