tag:blogger.com,1999:blog-5713178645208582139.post2984178125007134195..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Is This How The ECB Thinks?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-5713178645208582139.post-75927218014526469612011-04-03T00:41:31.788-05:002011-04-03T00:41:31.788-05:00isn't the point that the european system is in...isn't the point that the european system is incomplete. The ECB targets the core, as the periphs are economically insignificant. it is doing what i ought to do. <br /><br />I don't think the ECB ought to use monetary policy to try and paper over the failings at the fiscal level. by focusing on its 'narrow' mandate in this way, it may force the fiscal authrities to complete Europe&Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-73497202655357632932011-04-02T11:12:28.496-05:002011-04-02T11:12:28.496-05:00"Structural adjustment" requires that PI..."Structural adjustment" requires that PIIGS bondholders absorb losses; bondholder losses lead to credit tightening; and therefore the ECB is dragged along to bail out bondholders at 100 cents on the dollar. Should Merkel face the German voters after proposing a sufficiently-large PIIGS bail-out, or should she wait for the ECB to ride to the rescue? I think we know the answer.<br /><brDavid Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-18444645084370722952011-04-02T09:49:09.627-05:002011-04-02T09:49:09.627-05:00The basic fact is that the monetary and fiscal nee...The basic fact is that the monetary and fiscal needs of the various EU countries are wildly different, and Wessel's graph makes this abundantly clear.<br /><br />Even in good times, the Euro concept was suspect. In tough times, there really are no good solutions.<br /><br />This is the inevitable result of a flawed policy decision.<br /><br />Alas,<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-89969958557474378362011-04-02T06:20:11.276-05:002011-04-02T06:20:11.276-05:00Anonymous:
Just to be clear, when I said "en...Anonymous:<br /><br />Just to be clear, when I said "endure some structural and deflationary pain" I was attempting to summarize Stark's view. My own view described in the links above is that the ECB could do some good--though it wouldn't solve all the problems--with more expansionary monetary policy.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-50934044277481931302011-04-02T02:29:50.755-05:002011-04-02T02:29:50.755-05:00Great post.
But I have to disagree with this one:...Great post.<br /><br />But I have to disagree with this one:<br /><br />'endure some structural and deflationary pain'<br /><br />Spain needs about 5 to 10 years of 4 to 5% GDP growth to solve its unemployment problem. There is no way such a rate of growth will be accomplished in 2011 or 2012. such a growth rate will also need accompanying government investments, as it requires the Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-60245901490050309442011-04-01T15:15:46.186-05:002011-04-01T15:15:46.186-05:00Unfortunately, David, that's the way the ECB t...Unfortunately, David, that's the way the ECB thinks. We will find that for sure this Thursday at the ECB policy meetings but the chances are they will go ahead and raise rates. They have to, not because the economic data or the actual anecdotical reality justifies that, as you rightly point out in your numerous posts, but because the markets "dictate" them to. Their credibility, notAntonnoreply@blogger.com