Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: Eva who wrote (4407)	4/3/2008 4:53:58 PM
From: TobagoJack	Read Replies (1) of 4914

today is a public holiday here in hk, and so another teasing treat :0) quote Ilya: PIMCO on European developments pimco.com One Who Uses Few Capital Letters: note: the markets are actually indicating that the ECB is more likely to raise rates than lower them. in other words, the ECB technocrats have been successful in convincing the markets that inflation is their primary concern. also noteworthy, the accelerating price inflation in the European periphery, where CBs are also hiking rates. i doubt therefore that the ECB will heed PIMCO's call to 'proactively cut rates'. besides, from personal experience i can confirm that euro-zone inflation is anything but in need of yet another shot in the arm. it's getting quite annoying as it is. PIMCO's apparent conviction that one should avoid any and all economic slowdowns/downturns at all costs, inflation be damned, amounts to recommending exactly the wrong remedy of course. credit booms create malinvestments that need to be periodically liquidated if the economy is to remain on a sound footing. avoiding downturns by egging on credit expansion even more leads to ever worsening long term structural economic damage. we can not repeal the laws of nature, and neither can we repeal the laws of economics. PIMCO falls prey to the 'potent directors fallacy' - the belief that a bunch of monetary bureaucrats can somehow defeat the business cycle. all they can do is alter its frequency and amplitude - usually to everybody's great regret in the end. unquote

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