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To: Earlie who wrote (60167)	1/21/2001 12:28:31 PM
From: Spekulatius	Read Replies (1) \| Respond to of 436258

Earlie - the Germans are very sensitive about inflation. The German's insisted that the European central bank to be independent from any government.To reinforce that,the central bank was located in Frankfurt. The French are nearly not as sensitive about inflation,of course they always wanted low inflation as well, but were never willing to pay the price. Regardless,the German's rule the European central bank :-). The European central bank tends to be less reactive than the US, as far as interest changes are concerned. The ECB does not look at stock markets as much when making decisions either, the most important factors are the foreign exchange rates (against US$ and yen) and the inflation. Since the US$ is still pretty high and growth seems solid, the ECB doesn't see and reason to lower interest rates. AG mistake is to look at stock markets for decision points, IMHO. He knows that the paper wealth cannot be destroyed without killing the economy. The problem however, with that is that the enormous stock market volatility creates a yo-yo situation, such that he will overshoot in the one direction or in the other but never will be right. The other aspect of lowering the interest rates is to keep real estate going. This seems to be the last cylinder running - real estate is still strong because lower interest rates make RE more affordable. However, RE is even more so influenced by the job market. If the Job market turns sour, the RE will deflate, regardless of interest rates. My guess is that it will be the job market that will eventually kill the economy.If the job market turns sour, the consumer confidence will suffer and RE will go and with it the economy, no matter what the interest rates will be.