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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (25834)	3/17/2005 11:19:17 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

The ECB wants to raise rates becasue they think rates are overly accommodative and too low. There! That in one sentence is why they want to raise rates. Trichet and Issing have both made statements to that affect many times if I am not mistaken. The problems for them are many: poor growth high unemployment strong euro slowing world economy that left Europe behind during the last big uptick Now, if Inflation gets out of hand they will hike anway. If not, they won't. At 2% rates, Europe runs high risk of falling into the deflation trap just like Japan, if and when the next worldwide recession hits. Hopefully they do not try and fight it like Japan did. You can hear the fear in Issing and Trichet when they warn not to change the stability pact. It will be a license to attempt to defeat the recession with a bunch of spending that will not solve any problems IMO. Is anything I am saying making any sense to you now? Mish