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Tag Archives: ECB

Jubilee – Cancel Debt!

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There has been a lot of good economic news lately, at least compared to the very bad news of a few years ago.  But that doesn’t mean that there aren’t bad things worth keeping a close eye on – especially those that predict future action by the Federal Reserve.

The velocity of the US Dollar – the number of times per year that money turns over through the economy – continues to drop without an end in sight.  This is a worrying sign because it suggests that most of the economic growth we are seeing comes from money that is being more or less printed by the Fed.  It also suggests that there will be another round of quantitative easing, or even more money printed.  There has to be a better way – and this wouldn’t be Barataria if we didn’t take a stab at how.

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Austerity Goes Down

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How’s that austerity workin’ for ya?  Just as sequestration takes hold here in the US, Europe is looking to go the other way, releasing more Euros (and even Pounds) in order to get things going again.  The new US “policy” of budget balancing, backed into without thinking, is now being formally abandoned by everyone else.

There is probably some kind of requirement that any blog on economics has to write about Europe every so often, even if nothing new is happening.  But today there may well be something worth writing about as the Central Banks develop the whiff of panic that has been absent so far.   As Japan becomes more urgent and the US shoots itself, Europe has some tough choices to make.  What, or better yet can, they do?

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Acronyms vs. Reality

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The European Central Bank (ECB) has come to the rescue!  On Friday, they announced a separate permanent fund to buy €500 billion worth of national bonds from EU member nations.  Markets were up worldwide in response to news that the Euro would be preserved and stabilized.  It’s nothing but good news all around!  Right?

Not so fast.  Like all good news these days, it has its roots in bad news.  Two days earlier, the German government was unable to sell enough bonds at auction, as demand fell for anything tied to the Euro.  Bailing out Greece or Spain was never really on the table, but bailing out Germany is a priority for the Frankfurt based ECB.  And this starts the twisted and difficult tale of the bailout that may or may not culminate in the closing chapter of the Eurosaga that has plagued markets for over four years.

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