Impending Destruction of the US Economy

[GRG55]

Re: Impending Destruction of the US Economy

Jim Jubak of Money Central (MSN) has a good article about the published European inflation rate of 3.3%, well above the target for the European Central Bank, and how he expects the ECB this coming Thursday to raise their interest rate.

http://articles.moneycentral.msn.com...bak.aspx?msn=1

It is inconceivable how the ECB can afford to raise short term rates when their banking system is in melt-down.

If they do raise rates they will find themselves having made a serious mistake as they will be cutting even harder next year in a desperate effort to steepen the yield curve so the banks can repair their cratered up balance sheets. This would be a lot like the Feds mistake in 2000 when they raised rates, and then had to cut 50 bips in an emergency meeting in Jan 2001 when Greenspan realized he mis-calculated.

[rj1]

Re: Impending Destruction of the US Economy

It is inconceivable how the ECB can afford to raise short term rates when their banking system is in melt-down.

If they do raise rates they will find themselves having made a serious mistake as they will be cutting even harder next year in a desperate effort to steepen the yield curve so the banks can repair their cratered up balance sheets. This would be a lot like the Feds mistake in 2000 when they raised rates, and then had to cut 50 bips in an emergency meeting in Jan 2001 when Greenspan realized he mis-calculated.

You were right, they decided to not change their rate.