they don't care about the house market collapse: that's an artificial bublle, don't you get it ! ? They want to STOP INFLATION, that's the point, if house prices go down that's GREAT, that's good for inlation as it is one of the main expenses of people. Get some good macro-economics books and read them before you start to discussing this.
Spain, Ireland `Thrown to the Wolves' After ECB Move
- Thread starter makloda
- Start date
I guess that's why the Fed,the ECB and the MPC are doing such a great job of keeping all their economies in the awful position they are currently in.
Because they've read a ton of books on macro-economics and are educated in that field to an extremely high degree but in reality know nothing about what their economies actually need.
I think you should put down your macro-economic books for 5 minutes and get some newspapers and read about what's happening to real people in real life.The ECB cannot stop inflation with a 1/4 point raise,it won't make a blind bit of difference except make life more difficult for people struggling to survive - when they're forced to move out of their homes they can pat themselves on the back.Hell,the price of oil won't even be important because everyone will be selling their cars.
I think what they want to force Fed to hike rates.
Bernanke resisted so they hiked to force him
If Fed resists ECB will hike again. until Fed understands that they must hike too
I guess that's a super effective weapon against inflation and stupid Fed
By the way - there is a lag between core and healine - and core will rise later so headline alone gives all rights to raise rates
And not sure what Econ 101 you read but my Econ 101 says - rates must be higher than inflation to defend savings and prevent excesses- doesn't matter what it caused so 4.25%>4%
The Fed lowers rates and everyone bitches about how stupid Bernake is for bailing out greedy investment banks and ignoring the huge inflation problem. Trichet raises rates and people bitch about how he's killing the economy and how it won't make a difference to headline inflation.
Give me a break.
Vlocker raised rates during the last oil shock and is now lauded as a hero. I guess the question is what's worse, rabid inflation or a recession. A better question might be who suffers most during each of those two scenarios.
Give me a break.
Vlocker raised rates during the last oil shock and is now lauded as a hero. I guess the question is what's worse, rabid inflation or a recession. A better question might be who suffers most during each of those two scenarios.
Let's not forget who CAUSED this inflation...
#1.. Central Banks pumping out the money like there would never be a consequence... they should be HORSEWHIPPED.
#2.. Gummints around the world spending more than they take in from tax revenues.
If they don't do something about it, we're in for an INFLATION FIRESTORM!!
#1.. Central Banks pumping out the money like there would never be a consequence... they should be HORSEWHIPPED.
#2.. Gummints around the world spending more than they take in from tax revenues.
If they don't do something about it, we're in for an INFLATION FIRESTORM!!
I agree in principle. Rates below the rate of inflation should only be justified by a weak/stagnating economic outlook and only for very short periods of time (unlike 2002/2003).
However, all economic indicators now already do suggest severe weakness in the Eurozone, not only in Spain and Ireland but also in France and Germany. This by itself should tame inflation over the next 2-3 years. A series of hikes over the next couple quarters by the ECB - that I personally think Weber is determined to enforce - paired with the upcoming economic weakness will IMO likely end up destroying millions of jobs in Europe over the next couple years. That's the cost of 'making sure' the genie isn't let out of the bottle I guess.
Reminds me of the Bundesbank hikes in 1990/91. We all know how that ended.