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Weber Says Higher Rates May Be Needed After Recovery
- Thread starter ASusilovic
- Start date
Excellent post.Quote from Ivanovich:The ECB believes it can actually control inflation. A quick look at the history of the life of the Euro Area (since it's inception) will tell you that's a pipe dream. You cannot concentrate on headline inflation when you have no control over it. The ECB could raise rates to 10%, and still all it would do is stroke inflation through the Euro's rise against the dollar, and the de facto rise of commodities because of the EUR/USD rate. The real truth (which the ECB cannot stand, I'm sure) is that only the Federal Reserve can cut back on the Euro Zone's inflation rate. If the Fed supports the dollar, commodities are dampened accordingly and headline inflation all over the world comes down as a result.
My take is the Weber is talking up the Euro as the ECB [or the other central banks] doesn't want any more rapid erosion of its value.
COT's are massively short against the european currencies, if that really means anything.
COT's are massively short against the european currencies, if that really means anything.
Quote from runningfreeyeah:
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YOU'RE ADVICE IS FAULTY YOU ARE ASSUMING A LATERAL SHIFT IN BASIC ECONOMIC FUNDAMENTALS. ALSO, BEAR IN MIND EUROPE AND JAPAN ARE AT OR NEAR RECESSION FURTHER CURBING DEMAND FOR GOODS. THE WHOLE ARGUMENT THAT THE REST OF THE WORLD IS DECOUPLED FROM THE US IS FALLACY. THE US ALONE IS 3X THE SIZE OF EUROPE, CHINA AND INDIA COMBINED. IF ARE ECONOMY GOES INTO RECESSION IT WILL BE MUCH WORSE FOR THE REST OF THE WORLD.
YOU OUGHT TO BE TELLING YOU CLIENTS TO BE PREPARED FOR DEFLATION. YOU ARE SUFFERRING FROM RECENCY BIAS WHERE YOU ARE PROJECTING CURRENT TRENDS INTO THE FUTURE.
I agree that the rest of the world has yet to decouple from the US, but you may need to update your reference books: the economy of the European Union as a whole is the worlds largest economy.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
Quote from BVM88:
I agree that the rest of the world has yet to decouple from the US, but you may need to update your reference books: the economy of the European Union as a whole is the worlds largest economy.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
Great link, although caveats obviously apply. I'm a fan of the Euro economy, but I also see China overtaking Germany and Spain dropping below Canada, Brazil, Russia and India before this cycle is done. Iran could be a dark horse.