Trichet: "ECB Still Focused on Fighting Inflation"

Quote from makloda:

Daal is right, the ECB should consider data from around the world (Asia, US, Japan, UK/Spanish/Irish housing), take a hard look at the bond markets and see that the real risk here is deflation and not inflation.
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popping bubbles is not deflation that's return to normalcy

What I see now that US CPI is 4.3% and Fed rate is 3.5%, And probably 2.75% by the end of the month

Why in the hell I get negative interest return on my money now?

When time for deflation they can cut. Oil is 90. Gold 900, euro 1.5 . What f-- ing deflation? What data for deflation?

Bond markets show just flight to safety and nothing else

By the way makloda I remember your summer posts about buying deeps and selling naked puts
So I have great suspicion that you are worried not about deflation but about your losses
 
Quote from makloda:

"... the real risk here is deflation and not inflation.
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That's what policitians keep telling us, but I don't think it's the truth.

If we got a deflation, excesses would be wrung out of the economy. We would eventually adjust and move forward. The impact of deflation would be TEMPORARY.

If we continue to pursue this inflationary course*, nearly everybody will lose nearly everything... and America as we know it will be gone. The impact of inflation is PERMANENT.. and destructive.

The "risk" of deflation is acute to POLITICIANS... none wants to run for reelection during any kind of downturn. It would be too easy for the opposition to claim, "your strife is the encumbent's fault. Don't reelect him. Elect me. I'll save you."

I understand the potential deflationary influence of "bond debt to be repaid", and a housing decline. Well, we all know the Gummint and Fed never had any intention of repaying our bonds "in kind" [buying power], but rather always intended to just print the money and repay with deflated currency. I also believe the Fed will FLOOD the system with more money, credit, and "rates down to zero" in an effort for the deflation to not take hold. Those actions will be hyper-inflationary and destructive to the buying power of ALL Americans.

* Oh yes, we have quite an inflation now. It's been likely running closer to 10% per year for the last 5 years... why else would the Talking Heads make it a point 10 TIMES A DAY to keep telling us "don't worry, be happy... inflation is only 2%"?
 
ECB has only a single mandate required by treaty:

Keep inflation below a target of 2%

The fed has duel mandates of price stability (with no explicit target) and employment growth.

At the moment Eurozone inflation is above the target, hence the strong words of Trichet. All you little wieners whining that the ECB should ease, trichet is a fool etc should know the facts first.
 
Quote from alientrader:

The french is smarter than the americano
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Oh yes, surely!

The above stupid comment aside, the main issue is the single mandate of the ECB - price stability. It's almost as if roles are reversed with the Fed and ECB. If any central bank needs a dual mandate of growth and price stability, it's the ECB. It has to balance the need of many nations, some of which are at serious odds with one another over growth prospects and other market diversity like housing. Spain and Ireland have exceptionally poor housing markets right now, but that problem does not exist to the same level in Germany or Belgium.

Then you've got the Italians who have made an art of fiscal irresponsibility, and the French who are perfectly pleased with 35 hour work weeks, strong union protection and 1.0 growth in GDP. And of course the German powerhouse of industry. How does one central bank please everyone?

It can't, simply put.

Then on this side of the pond you've got Helicopter Ben and his total disregard to inflation, printing money for a government that spends it like a drunken sailor.

All of these folks need to be put in a ship and sent to the bottom of the ocean.
 
Quote from kashirin:
By the way makloda I remember your summer posts about buying deeps and selling naked puts
So I have great suspicion that you are worried not about deflation but about your losses
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LMAO Yea your understanding of my trades is about as much on the money as your inflation paranoia.
 
Quote from kashirin:

why? because you're stupid long?

or because he thinks not only about greedy crooks but Europe people and their savings?
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Lol another European idiot. If the ECB crashes global markets how do you think Europeans and their savings will do then you class A moron :D
 
Quote from Ivanovich:

Oh yes, surely!

the main issue is the single mandate of the ECB - price stability. It's almost as if roles are reversed with the Fed and ECB. If any central bank needs a dual mandate of growth and price stability, it's the ECB.
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I don't agree here. What you want from money is not to promote growth but you need to know how much money can buy

And with the fiat currency you need someone who will think exclusively how to save money value

If those conditions are met then economy will grow _if_it_needs to grow

Explain me one thing - why do we need economy growth here in US through consumer consumption?
Don't we consume enough? Europe consumes much less

I'm not sure at all we need such growth
I'm not ready to buy new t-shirt every 2 hours for economy to grow.
I just don't need it
 
The markets response to the ECB comments is clear: nobody believes their BS. GBL futures soaring and EUR dropping. The way I look at it is that Mr. Market feels the ECB is dropping behind of the curve and their eventual cuts might come too late.
 
Fighting inflation is not an issue on which a central bank should compromise. Low and stable inflation is absolutely necessary for the long term stability of the economy and currency.

Everybody looks at the FED for a bailout when something goes wrong. Exactly this behaviour makes other parts of the economy more volatile as people EXPECT the FED to cut rates when something happens.

Issues like the credit crunch aren't caused by monetary policy, so why should monetary policy be the instrument to fix these issues? The effort should be focussed on eliminating the real problem; risk assessment and market transparancy.

Looking at the FED for a solution will only ignore the real problems. Good for the ECB to keep focussing on inflation.
 
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