So Much for Stability: The Euro Cash Flood

Bloomberg is reporting Trichet Can't Rule Out More Cuts, Offers Cash Flood.

European Central Bank President Jean-Claude Trichet said he can't rule out further interest-rate cuts after joining a round of global reductions today and offering to flood the banking system with as much cash as it needs.

The Frankfurt-based ECB lowered its key lending rate by half a point to 3.75 percent and said it will start lending banks unlimited cash in its weekly auctions at the new benchmark. Asked if the rate cut was a one-off, Trichet replied: "I don't say that. I say that we will always do whatever is necessary."

By deciding to lend banks as much cash as they want at the benchmark rate, rather than at a rate determined by demand, the ECB "is now really deploying its strongest weapon to bring money- market rates down," said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. "This brings them closer to becoming a European clearing house." ...

"The decision just made by the ECB to open liquidity, to tell banks `if you need financing, come refinance yourself here, you can do it at fixed rates without limit,' is the sort of decision that may unfreeze the system," French Finance Minister Christine Lagarde said on France 2 television.

So Much For Price Stability Mandates

What was it someone was telling me just two weeks ago? Oh, here it is: "Trichet will NEVER cut. The ECB has price stability mandates." The person went out of his way to put "NEVER" in caps.

That's rather touching given that today the ECB made a 50 basis point in conjunction with global coordinated panic.

Looks like they're all Keynesians now. (That style of punchline is getting a bit stale, but I just couldn't resist.)

Comments

[moonbat1775:]

I heard that the best way to change a bad law was enforce it to the hilt. So, since "they're all Keynesians now" hopefully we can put that theory in the ground once it fails (again). I guess it was just not tried wholeheartedly enough in the past.

2008 Oct 08 06:52 PM

[Alan von Al...:]

?? - How do we recover liberty, free market capitalism, private property, enforcibility of contracts after they've been ridiculed and abolished?

2008 Oct 08 07:47 PM

[moonbat1775:]

"How do we recover liberty, free market capitalism, private property, enforcibility of contracts after they've been ridiculed and abolished?"

By voting for someone who understands such things, Dr. Ron Paul. You might pray, too.

Clearly, central banking is an invention from hell.

2008 Oct 08 08:05 PM

[Eagle-Chief:]

Moonbat - you said it well !

Mikee - what are these central bankers going to do next - start handing out free cash to EVERYONE who wants it, in order to flood the world with "liquidity"? Run the printing presses 24/7/365 and they will "fix" the financial crisis that they created and we will all be millionaires.

Can you say HYPERINFLATION?

2008 Oct 08 09:58 PM

[jcrash:]

Free markets are great in theory. The look great in textbooks. Of course, those same textbooks push the efficient market theories - and if you believe in that one, maybe Santa and the Easter Bunny will be nice to you this year.

2008 Oct 08 10:24 PM

[moonbat1775:]

jcrash,
So what is the alternative? And why wouldn't the free market adopt your alternative anyway? So what need to force on people? And what does economic liberty have to do with efficient market theory? Economic liberty need not be efficient just more efficient than any alternative if it is to be judged on efficiency. But there are many more justifications than just efficiency. Plus we don't even have a free market so your argument does not apply.

2008 Oct 08 10:44 PM

[monday1929:]

"We will always do whatever is necessary"- the truth at last. It is how Govts. will justify killing its citizens when it believes that is "necessary".

And to be clear, the intertwining of Govt. and Big business IS Fascism, or what Mussolini called "Corporatism".

And J crash, didn't they find price fixing in the textbook business?

2008 Oct 09 09:20 AM