Spain, Ireland `Thrown to the Wolves' After ECB Move

Quote from makloda:

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.
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i live in europe and could say the situation is worsening every day.

a impending real estate crash across the board will throw into poverty hundreds of thousands of europeans and the economic consequences could be vastly amplified by the anemic environment in the rest of the developed economies.

i understand the ecb though. their strategy has been voiced many times over in the past and sounds coherent : <b> inflation control </b> at any cost.i personally dont buy into the strategy of the fed: <b>pump & bail</b> but that's jmho. some believe that allows much faster correction of excesses and less prolonged contraction cycles. well the ecb prefers to have a more pronounced recession at the expense of cutting off the economic exuberance asap. keep in mind that the euro zone has a much more tight labor market which requires heavier shocks to produce adjustments.
 
Quote from asap:
keep in mind that the euro zone has a much more tight labor market which requires heavier shocks to produce adjustments.
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That's true. Also let's not forget that every worker that loses their job in Europe is one member less for the unions :)
 
Quote from makloda:

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.
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What kind of nonsense is this: I live in Belgium: companies have trouble finding workers; it's the same in Holland if you read any dutch newspapers. That's not exactly the sign of an economy in trouble.
 
Still, while he acknowledged some countries will be harder hit than others by the rate increase, he said the bank must serve the entire euro region just as the Federal Reserve sets policy for all 50 U.S. states.
If Trichet said that he is an idiot.
Second, how do you guys know that any price increase is actually an inflation? Or how do you tell apart inflation and demand? Especially in macroeconomics?????? Somebody please enlighten me I have no clue.
Geniuses on this site use the word inflation with such an ease that it makes me feel dumb because I have no freaking clue where demand (and Congress with its infinite wisdom fucking with food supply) ends and inflation begins.
SO PLEASE TELL ME HOW DO YOU KNOW?????
 
Quote from Cesko:

Still, while he acknowledged some countries will be harder hit than others by the rate increase, he said the bank must serve the entire euro region just as the Federal Reserve sets policy for all 50 U.S. states.
If Trichet said that he is an idiot.
Second, how do you guys know that any price increase is actually an inflation? Or how do you tell apart inflation and demand? Especially in macroeconomics?????? Somebody please enlighten me I have no clue.
Geniuses on this site use the word inflation with such an ease that it makes me feel dumb because I have no freaking clue where demand (and Congress with its infinite wisdom fucking with food supply) ends and inflation begins.
SO PLEASE TELL ME HOW DO YOU KNOW?????
More...


An "inflation environment" is one where the money supply is excessive.. and that spurs "general price increases in most goods and services"...

As for an increase due to "demand pressure"... that would be a small number of items or few categories... NOT accompanied by a general increase in most/all good, services, and assets.

If YOU need the item, guess it doesn't matter why the price has increased.
 
Quote from cvds16:

What kind of nonsense is this: I live in Belgium: companies have trouble finding workers; it's the same in Holland if you read any dutch newspapers. That's not exactly the sign of an economy in trouble.
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Employment is a lagging indicator. Forward looking indicators suggest weakness is right ahead in the Eurozone.
 
Quote from gnome:

An "inflation environment" is one where the money supply is excessive.. and that spurs "general price increases in most goods and services"...

As for an increase due to "demand pressure"... that would be a small number of items or few categories... NOT accompanied by a general increase in most/all good, services, and assets.

If YOU need the item, guess it doesn't matter why the price has increased.
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Then this is not exactly inflationary environment nowadays.
 
Quote from cgtrader:

wrong.

increase in the money supply=inflation
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WRONG !

increase of money supply is often thought as the CAUSE of inflation.

inflation = INCREASE IN PRICES

but hey, don't believe my word for it, just do a google: http://en.wikipedia.org/wiki/Inflation this is the first one I found, read it, you might learn something.
 
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