Wednesday, January 23, 2008

The new fools: The ECB

If the US markets affected Asia, then doesn't Europe's policies affect the US? That's the message we are seeing this morning. In a global economy, you need coordination of policies. At least that is what the bears see.

However, when the Fed cuts next week, people will have to look further out than the next day of trading. Eventually, the low rates on cash will force pension funds to shift assets into stocks for actuarial reasons.

But what's the definition of "eventually?"

1 comment:

Anonymous said...

palmino (DKE?), i could not disagree with you more on the ECB and the FED. the FEd was not behind the curve. they have a mandate to fight inflation not bail out speculators or people that can't manage their credit.

the current u.s. economy is a big ponzi scheme (asset inflation)
bill gross should be the head of the FEd not Bernake.

the FED's surprise cut caused panic, the ECB now has the steady hand.

for the last few years the politicians have been saying that we need to do more to make housing affordable but now with home prices dropping they are singing are different tune.

what does the rest of the world think of us now? what will the history books say?