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European Union President Says Obama Stimulus is The ‘Road to Hell’

The head of the European Union slammed President Barack Obama’s plan to spend nearly $2 trillion to push the U.S. economy out of recession as “the road to hell” that EU governments must avoid.

The blunt comments by Czech Prime Minister Mirek Topolanek to the European Parliament on Wednesday highlighted simmering European differences with Washington ahead of a key summit next week on fixing the world economy…

eurpres

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Filed under: Economics, Obama, World, , , , , , , , , , , , , , , , , , , , , ,

Euro Central Bank President Trichet Says Deflation Won’t Hit Euro-Area, No Fiscal Stimulus

European Central Bank President Jean-Claude Trichet spoke to the Wall Street Journal and was quite reluctant to acknowledge some of the 16-nation currency bloc’s financial problems. He said that Europe does not need to use fiscal policy as liberally as the United States has.

He took some shots at the global financial community, stating that it is unjustified to criticize Europe for its lack of conviction in battling this crisis. Nonetheless he did offer his own critique of the U.S. situation, stating that the U.S. should be ‘quick’ on implementing a rescue plan and on settling on a final budget.

As far as monetary policy is concerned he said that zero interest rates would not be “appropriate” and that there are “drawbacks” to such a policy. He did, however, acknowledge the obvious, that the economic trend remains “downward.” While he did not give any specifics as to his ideal interest rate target, he did suggest that the bank could lower rates below the current 1.5% mark. Nonetheless, despite the difference in approach taken by the Federal Reserve and the ECB, central banks are not in a “race,” he noted.

Ultimately, he has confidence in the experts that say that deflation will not hit the Euro-Area.

We could see the Euro rally as the news of this interview disseminates among the public. As dwarfed expectations of deflation loosen the notion of a zero-interest rate policy, those seeking yield may send their money to Europe and hence prop up the 16-nation currency.

– LG

Filed under: Global Economics, World, , , , , , , , , , , , , , , , ,

JPMorgan’s Rating Outlook Slashed by Moody’s

JPMorgan Chase & Co., a commercial and investment bank that was once thought to be one of the most stable, had its rating outlook cut to negative by Moody’s Investor Service after trading ended today. Indeed, the bank which purchased Bear Stearns after it had essentially failed last March and who purchased Washington Mutual after the FDIC had placed it into receivership was once seen as a beacon of banking stability. Now, with the expectation that the financial institution will be hit with bad loans and credit defaults, the lender’s status is in danger.

The news of this release may spark volatility in equity markets throughout European and U.S. trading. As such, those pairs which have been estimated to be vehicles for risk aversion, the U.S. Dollar against the Euro for example, may see their respective price action push full steam ahead.

– LG

Filed under: Economics, , , , , , , , , , , , , , ,

Euro Monetary System Risks BREAKUP As Unemployment Soars Higher Than Expected

FIRM EARNING $500M BETTING AGAINST MORTGAGE SECURITIES SEES EURO MONETARY SYSTEM ENDING…

Unemployment Rises to 8.2% With Forecasts Seeing 8.1%…

Filed under: Global Economics, World, , , , , , , , , , , , , , ,