April 5, 2005

PLAIN ENVY:

ECB itches to raise rates, but why? (Carter Dougherty, April 5, 2005, International Herald Tribune)

Sluggish economies with low inflation seldom justify higher interest rates, but the European Central Bank will probably deliver precisely that to the 12-nation euro zone this year, and explaining why is already proving tricky.

At the bank's monthly meeting Thursday, it could begin to lay the rhetorical groundwork for raising rates, most likely in the fall. But it will not be able to justify this move as central banks normally do, economists and ECB analysts said.


The euro is all they have left, even if it is artificially propped up.

Posted by Orrin Judd at April 5, 2005 12:58 AM
Comments

Perhaps because the only way to attract investment is by articially raising the interset rate.

Posted by: jd watson at April 5, 2005 6:24 AM

I've been waiting for them to cut for years. This is insanity.

Posted by: JAB at April 5, 2005 8:43 AM

Gotta make those product prices less competitive in the world market in order to really get that unemployment rate soaring towards Weimar Republic levels. Combined with the immigration/assimilation problem, that ought make things even more stable over there than they are now.

Posted by: John at April 5, 2005 9:09 AM

I agree with John above. Gotta expose the euroweenie economy for what it is before the next election, so none of the Democrat wannabes point to the EU as an example for us to follow as Clinton did in his first term. I hope the Bush team has plans to expose the EU's (and Canada's) vaunted universal health systems for the shams they are before Hillary and her coven of witches tries to foist the concept on us again.

Posted by: erp at April 5, 2005 9:30 AM

Perhaps unexplainable because it's a political decision to undermine foreign investment in US debt even if it worsens their own economies. Anything to get US conservatives out of office in 2006/2008.

Posted by: Genecis at April 5, 2005 9:48 AM

If it is a political decision, and that does seem plausible since it is certainly not one based on any economic model of which I'm aware, it's a pretty dumb one. The Euros have no strategic depth in an economic war and, Lord knows, they have no capacity for shared sacrifice whatsoever. The second things start to pinch, any enthusiasm for economic war with the States will disappear.

Posted by: bart at April 5, 2005 10:09 AM

bart:

Pinch who? The gov't employees won't feel it and the general population isn't in charge.

Posted by: Mike Earl at April 5, 2005 10:21 AM

If the EU Constitution gets voted down in France, the party is over and it disappears or goes back to being a customs union. Britain is never joining. Only welfare recipient countries like Spain and Grease really support it.

Posted by: bart at April 5, 2005 11:38 AM

I think they've just been reading too much of Old Media and its frenzy on how a falling dollar is going to economically destroy the USA. If one believes that, then it would follow the the ECB is once again demonstrating the superiourity of the clever EUlite over the moronic Chimpy McBushitler.

Posted by: Annoying Old Guy at April 5, 2005 10:17 PM
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