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BLOGGING GETS RESULTS!
Yesterday, a bunch of bloggers were complaining that the European Central Bank was unwilling to face down the threat of deflation and was therefore pushing us all down the road to ruin. Today, they signaled that they may be ready to act more aggressively. Coincidence? I don't see how that could possibly be a coincidence.
COMMENTS (7)
Oh, well, if they've "signalled" that they "may" (which I guess leaves room for "may not") be "willing to act more aggressively," then everything's cool.
Posted by: SqueakyRat | March 5, 2009 6:46 PM
When the interest rate is zero, and still nobody wants to borrow money, isn't that a sign that interest rates have very little to do with investment activity at this particular time? And if so, then isn't a drop from 2.0 to 1.5% going to be virtually worthless. Meanwhile, aggregate wealth in fixed income assets without locked rates is reduced by 25% (.5/2.0), further compounding the confidence-shattering destruction of wealth in equity and housing investments. Do these monetary steps have the effect we assume they do under all circumstances?
Posted by: urban legend | March 6, 2009 1:41 AM
The ECB was built on the foundations of the German Bundesbank and shares its political independence and its philosophy of monetary stability/low inflation. ECB-chairman Trichet's remarks were therefore hardly remarkable, if perhaps a little traditional: the ECB is expected by everyone to err to the side of caution (which means leaning towards low inflation at the cost of somewhat higher unemployment).
Now, for the past few years the ECB has successfully staved off the demands of the French and Italian governments for lower interest rates, which would lead to a depreciation of the Euro, and a return to competitiveness for their workers in the export industries. The ECB made its reputation as a powerful instution by denying these politicians any influence in monetary policymaking.
But you suggest that a couple of American bloggers might have made the difference in this case. Do you really believe that scribes with a passing interest in economics might perhaps be more influential than the leaders of some of the largest members of the Eurozone?
Posted by: JJ | March 6, 2009 6:50 AM
But you suggest that a couple of American bloggers might have made the difference in this case.
Adjust your humor detector, JJ.
Posted by: Brock | March 6, 2009 8:27 AM
It's frightening to know we have a president who talks about the "profit to earnings ratio" in stocks. That shows an abysmal lack of knowledge from the man with such ambitions to remake the nation's finances. Savvy eleven years olds wouldn't say that. I'm counting on his being willing to be led and educated by the Europeans.
Posted by: Anonymous | March 6, 2009 9:19 AM
"Adjust your humor detector, JJ."
Touché.
Posted by: JJ | March 6, 2009 12:52 PM
Is it really funny that a financial ignoramus is trying to remake the world?
Posted by: Anonymous | March 6, 2009 2:29 PM