THE SUN SHINES EAST, THE SUN SHINES WEST, I KNOW WHERE THE SUN SHINES BEST:

If the ECB cuts rates it should do so boldly: Pressure on the European Central Bank to cut interest rates is growing as short-term growth prospects for the eurozone worsen (Daniel Gros and Ansgar Belke, 3/03/03, Financial Times)

[U]nder present circumstances, a small cut in interest rates is unlikely to have any effect on demand. If monetary policy is to be effective in these uncertain times, a large cut is needed. It does not make sense to cut interest rates by 25 basis points now. Either the ECB should cut now by at least 50 basis points, or it should wait for the uncertainty in Iraq to be resolved.

The increasingly apparent structural weakness of the European economy suggests the ECB should stay its hand. But if the ECB is not convinced of this, it should avoid cutting a little today, because that would not be a sensible compromise; in fact, it would just waste an option without helping the economy.

Don't you wish you had just $1 for every story you've read over the past couple years about how people are pulling out of U.S. markets and moving their money to an inevitably resurgent Europe? Posted by Orrin Judd at March 3, 2003 9:08 AM