Thursday, Dec 18, 2008
Why doesn't the BoE try this?? rather than cutting rates???
Bloomberg: ECB May Cut Deposit Rate to Revive Bank Lending, Economists Say
"The European Central Bank may cut its deposit rate as soon as today in an effort to jolt banks into lending more to each other, economists said."
..in answer to my alternative headline...."because they don't have Danny "slash and burn' Blanchflower calling the shots." Its no wonder the ECB have a stronger currency.
Posted by bystander @ 08:09 AM (476 views) Add Comment
6 Comments
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1. beartil2010 said...
It might look nice becuase it's being less generousto the banks, but it's still asking banks to lend more to spur the economy on. Which is not the real issue. The real issueis asset overinflation because of too much money, this needs to correct, and asking banksto lend more won't work.
Better than Blanchflower and Paulson though I'm sure.
2. bystander said...
Beartil2010 - I mean to imply that the currency strength is based on the ECB looking at alternative methods, than rate cuts, which will continue to make the Euro a better place to put investors cash and therefore increase the strength of its exchange rates, something in the long run, export led economies like Germany and France will find difficult to work with, especially as the home markets (eurozone) will not be able to take up the slack as they will also be in recession. In
addition I don't want the banks to free up lending until house prices in the UK have dropped by at least 30%, across the board, and not just on a New build estate in Manchester/Liverpool etc.
3. beartil2010 said...
Fair enough.
I don't think any decision they make will be good, the different zones/countries need different policies. One size does not fit all in this case, I'm expecting the euro to deteriorate at some point, the pound has already done so!
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