With, as usual, no clue as to why he and other Eurozone leaders are perceived as big-time failures…
The ECB needs to establish itself as the lender of last resort, it needs to cut interest rates to zero, it needs to adopt a higher inflation target, and it needs to stop dreaming that idiotic fiscal austerity will bring anything other than misery.
Gorilla says: “Adieu, M. Trichet, you will be gone and forgotten!”
M. Trichet, of course, the worst central banker not named Ben Bernanke!!!
As it’s very clear that both Spain and Italy may need massive bailouts, the ECB should be doing the following right away:
1) Announcing they will purchase at least a couple of trillion in Spanish, Italian, Greek, Irish, and Portuguese bonds.
2) Reduce interest rates to 0.25% and announce an inflation target of 5% for the foreseeable future.
3) Prepare the hopeless, lying Euroland politicians for the very likely possibility that the Eurozone will have to break up, if the PIIGS are to have any hope of economic growth.
4) Encourage the same hopeless, lying politicians to undertake large-scale stimulus programs (at least a trillion) to combat unemployment and foster real growth.
But M. Trichet, not content with making the same mistakes he made just 3 years ago, still doesn’t seem to get it.
And Ben Bernanke, who’s been wrong on everything for the past 10 years, still doesn’t seem to get it.
Gorilla says: “We’re heading for a decade or more of complete disaster, so long as they morons are in charge!!!”
From the ever clueless ECB Chief Jean Claude Trichet: “Strong vigilance is warranted with a view to containing upside risks to price stability.”
Gorilla translates: “We have to destroy the Euroland periphery in order to save the Bundesbank village!”
From the ever hapless ECB Chairman Jean Claude Trichet: “We have got a monetary federation. We need quasi-budget federation as well. Yes, we could achieve that if there is strong monitoring and supervision of what there is. Because what exists doesn’t correspond with the actual situation that we are facing. It is a situation where we need quasi-federation of the budget.”
Gorilla translates: “A monetary union without monetary union is a French union not yet on strike!”
What’s the best approach to deal with the worst economic downturn in 70 years?
ECB Chief Trichet thinks it’s all about the confidence fairies. Slashing deficits and cutting spending will make the markets feel better, and therefore growth will resume. This approach is without question the stupidest policy position held by a central banking head in living memory. It guarantees at least a decade of crippling, deflationary stagnation, accompanied by social disruption and mass unemployment.
Meanwhile, Treasury Secretary Geithner says we should not stop stimulus in the short-term and deal with deficits once it’s clear the world economy is recovering. A fine sentiment, except that the US is doing nothing to provide additional stimulus, while policymakers like Geithner and Bernanke seem to be quite comfortable with 15 million or more jobless citizens for the foreseeable future.
Gorilla says: “Not much hope when two major economic players are committed to being as stupid as possible for as long as possible!”
Back in Europe, banks and investors are anxiously awaiting the “stress test” results for European banks.
Alas, the stress tests don’t include the possibility that Greece and Spain may default on some of their debts, while there is no sign as yet from the ECB that Euroland will back these debts should push come to shove.
As one German wag described this endless cycle of rhetoric, inaction, and denial: “A stress test without stress”.
Nobody really wants to talk about sovereign debt restructuring, because that implies the ECB rescue package will not work.
What should be happening, namely the withdrawl of Greece, Portugal, Ireland, and possibly Spain from the euro, the devaluation of their new/old currencies, and a substantial increase in German domestic consumption, is not acceptable politically, but may happen anyway if the markets decide they’ve had enough and resume contagion.
For the first time, banking analysts are starting to talk about French debt, and if that’s in question then the Euro may collapse.
Gorilla says: “Trichet has had his day!”
From ECB President Trichet:
“Keeping inflation expectations anchored remains of paramount importance, under exceptional circumstances even more than in normal times. Our framework has been successful in this regard thus far. But the lessons of the past fifty years — and, in particular, our success in anchoring inflation expectations — should remain uppermost in our minds.”
A more succinct explanation would be hard to offer as to why nothing much is being done about the worst recession in 70 years. Non-existent inflation remains the only thing central banks care about; 10% or more unemployment is always someone else’s problem.
Gorilla says: “A Trichet a day keeps you jobless, I’ll say!”
