We see plenty of evidence that the ECB is simply not ready to ascend to a leadership position in the global economy. Trichet (and the ECB institutional structure) is completely reactionary in an economic environment that demands far more decisiveness than EU political will can generate, and is likely beyond the skill-set of career technocrats.
It should not be long until the joint populace of the EU demands that the ECB removes its head from the sand and follows the rest of the G20. My thesis of the "great rate compression" continues unabated.
And it is obvious which country is ahead of the cycle.
http://www.bloomberg.com/apps/news?pid=20601068&sid=akDysWZ8y4aM&refer=homeJan. 8 (Bloomberg) -- European confidence in the economic outlook fell to the lowest on record and unemployment rose to a two-year high, adding to pressure on the European Central Bank for more interest-rate cuts.
An index of executive and consumer sentiment dropped to 67.1 in December from 74.9 in the prior month, the European Commission in Brussels said today. That is the lowest since the index started in 1985. Separate data showed euro-area unemployment rose to 7.8 percent in November from 7.7 percent a month earlier.
European companies are cutting jobs and reducing investment in order to weather the first recession in the euro region’s 10- year history. A combined rate cut of 1.75 percentage points since early October and billions of euros in stimulus measures have failed to reverse the slide in confidence and data today confirmed the economy contracted for two straight quarters last year.
“It’s a real shocker,” said Martin van Vliet, senior economist at ING Bank in Amsterdam. “Today’s worse-than-expected data make an even more compelling case for the ECB to cut rates significantly further from here.”
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