See this .
For all the talk about how this shows that the Euro was ill-advised, I tend to think the real problem is that Jean-Claude Trichet is an idiot, and that's the whole of it.
Europe still hasn't even lowered their key interest rate to zero. Just like Bernanke here, the ECB has continually "guessed wrong" and had monetary policy which is, in retrospect (as it was in real time), clearly too tight. Even now the key rate isn't even zero. One novel way they may help to avoid an Irish default is to lower their key interest rates! Had they done this two years ago, there may not have been any solvency problem in the first place.
It's hard to know why exactly officials from Berlin to Tokyo have been so enraged over QE2, but one thing it suggests that these are people who don't know which way is up.
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Correct. Jean-Claude Trichet is an idiot. He's all over the place with always the same nonsense story. Austerity is the real thing. Each member nation shall slash wages and export itself into economic nirwana. Government spending is evil and doesn't change a thing because Europe is populated with Ricardian aliens.He's too stupid to acknowledge the most basic fact. That the ECB is the 800 pound gorilla in town and all these bond vigilantes are mere bonobos. Make a credible announcement to buy each and every bond denominated in Euros for a price of your choosing and the bonobo hoard will subjugate.You are done with job and you can return to the more mundane central banking business. Attending conferences in fancy resort hotels in Switzerland discussing non-existing entities like NAIRU or the money-multiplier. Not a lot we can do. Only bad options on the menu. Jean-Claude Trichet the clueless idiot or Axel Weber the ideological warrior?
ReplyDeleteThe current set-up of the EuroZone is a disaster. Every economist who was part of this experiment should be fired immediately for sheer incompetence. Basically we're living in a monetary dictatorship plus have chosen some I-know-nothing-about-central-banking dictators. Krass. Why the Irish or Greek do not abandon the Euro tomorrow is beyond me.
And yet, how many economists have really pointed out the obvious -- that Jean-Claude Trichet is an idiot? How much pressure on the Japanese Central Bank has there been the past 20 years arising from the Economics Profession?
ReplyDeleteSure, I know it's all there if one searches, but the relative science is just another reminder that Economics is a psuedo-science, not a science.