Central banks can do nothing more to insulate us from an Asian winter

Guardian UK ^ | 06 September 2015

[Lorianne]

The European Central Bank proudly announced on Friday that it is erecting a 17-metre-high bronze and granite tree outside its Frankfurt headquarters – an artwork intended to “convey a sense of stability and growth” – and, with its gilded leaves and massive trunk, presumably also wealth and power.

But when Mario Draghi, the ECB’s president, appeared before the world’s media on Thursday at his regular press conference, it was the limit to central bankers’ power that was on display.

Draghi was forced to admit that the outlook for eurozone growth and inflation had darkened considerably as a result of the slowdown in emerging economies and the market turmoil in China – the latter an issue he said he would take up with officials at the People’s Bank of China at this weekend’s G20 meeting in Ankara.

Meanwhile, Federal Reserve policymakers will have to decide in the coming days whether to stick to their carefully signalled plan to push up America’s interest rates at their next policy meeting on 17 September, in the face of growing fears about a Chinese slowdown.

Certainly, the International Monetary Fund made it clear last week that it believed policymakers should be cautious about pushing up rates in the current fragile environment.

Central bankers slashed rates to their current emergency levels in the depths of the crisis. They also unleashed quantitative easing on a massive scale, as a short-term measure meant to prevent an outright economic slump and buy time for other engines of growth – trade, investment, consumer demand – to be restarted.

[JoeProBono]

[tet68]

I guess if it slowly descends like the Times Square
New Year ball, it might have some relevance.

Pretty hideous “tree”.

[ChildOfThe60s]

And the market gyrations of recent weeks have been a reminder of a lesson the world learned in the crisis of 2008 and beyond: central banks are not the omniscient puppet masters of the global economy they seemed before the crash.

The world learned no such lesson. Had it, we would not have permitted the insanity they have rained down on us since then.

I doubt that many will learn that lesson after the next crash. Most will be standing in the ruins begging for the Fed et al to "save" us again.

[Lorianne]

Too true.