Global economy hopes raised after European stimulus

12 News ^ | January 25, 2015 | Pan Pylas

[Tolerance Sucks Rocks]

DAVOS, Switzerland (AP) - The global economic outlook just got brighter after this week's big stimulus from the European Central Bank, leading policymakers from around the world said Saturday.

In a panel at the World Economic Forum in Davos, they said a perkier Europe, coupled with a prolonged period of low oil prices, could help shore up the global economy following a period of underperformance that has prompted many forecasters to reduce their growth forecasts.

"Lower oil prices and the big decision by ECB could further improve world economic outlook," said Haruhiko Kuroda, governor of the Bank of Japan.

[Tolerance Sucks Rocks]

There is a portion of the article where an ECB board member says that lowering the Euro's value was not the primary motive of the stimulus. What say you?

[2ndDivisionVet]

I say lifting your own self out of a bucket is a physical impossibility.

[VRWC For Truth]

Deficit spending is economic disaster.

[pepsionice]

Here are the three things that come out of this gimmick:

1. Parity of the Euro to the dollar will be one to one. Maybe even 1.2 Euro to the dollar within eighteen months. For a whole decade...it’d been mostly .76 Euro to the dollar and I can even remember getting down into the .63 range for a year or so. It meant they could buy plenty of US imports, but had a tough sale of getting their stuff bought by Americans. Most believe Bush had this strategy in place to help the US economy (weak dollar attracts purchases). Most everyone agrees...with one to one parity...business will pick up in Europe.

2. There is some belief that the new parity will attract foreign interest...foreign investment....and new customers. Some European companies might be purchased by US companies.

3. There’s this one odd thing at the end of this discussion....all this money that the EU Central Bank will spend...where does it come from? It’s basically invented, and you have to wonder if this brings up some massive bubble experience within five years.

But if you ever wanted a European vacation for a reasonable price...by 2016, it’ll be very possible that it’ll be 1.1 Euro to the dollar. In 1985, the German Mark rose to 3.4 to the dollar, and I traveled across Europe and spent money like crazy that year.

[Viennacon]

Socialist of all stripes can GO TO HELL. Sick of Soros’ funded governments

[Tolerance Sucks Rocks]

By the time I went over in 1986, the mark had bounced back to around 2 to the dollar.

[caww]

....”all this money that the EU Central Bank will spend...where does it come from? It’s basically invented, and you have to wonder if this brings up some massive bubble experience within five years”......

That’s been raised by more than a few. But they are certainly projecting much for what they anticipate down the road...

Passing Climate Warming measures is on the front burner now...and the UN and Europe are pvery much in the bag on that note....since it’s not going over here well..BO’s bypassing us and making changes necessary to get this done with the UN and others at the top of the Globalist heap.
This will take money out of every business and industry and then some.

There ae so many other places they’re funneling revenue ..insane really.

[pepsionice]

Yep, I had to decide by summer of 85 if I was going to stay another year....with mark blasting away and folks easily buying BMWs. I decided that it couldn’t stay at that level, and it was best to leave. I remember a decade later talking to someone over the period. They were there when it barely 2 to 1, stayed through the 3.4 period, and saw it slide back down to 2. It was a massive introduction to economics.

I was here during the flip to the Euro...and watched my income level slide month after month...coming near .63 to the dollar. A lot of negativity around Americans who’ve sat through an entire decade of this lousy exchange rate while living around Europe.

[bajabaja]

The primary motive of Mario Draghi’s moves is to maintain the status quo and delay needed reforms. That means the European Union bureaucracy stays in place to do what it does and no member country bolts from the single currency. That should mean Greece gets even more loans and write downs rather than the reforms they need. And that means the Germans get upset because they will be looked on to fund it all, even more.

And it means the UK will want out when they get a chance to vote, as their money gets tossed about by Brussels as well. UKIP on the rise.

[nathanbedford]

You are right, the 1.2 trillion is essentially invented and it is done so quite undemocratically by elitist institution whose motivations do not coincide with the diverse interests of the various nationalities of the European Union. It is also worthwhile to note that the €1.2 trillion, while essentially "invented" are also essentially a surreptitious tax which means a tax imposed by a nondemocratic, elitist institution. It is a tax because eventually the rendering must be made.

The idea of imposing a 2% inflation rate is equally undemocratic. While I concede the idea that inflation is less pernicious than deflation, I maintain that inflation is itself pernicious, a tax, and an undemocratic means of transferring wealth from one sector to another. But, most of all, inflation is a device to permit politicians to buy votes with other people's money and to cover their tracks with currency devaluation which most of the electorate are not sophisticated enough to understand or agitated enough to resist.

So this qualitative easing, this bit of crony capitalism as it were, permits politicians to continue the game by extending the ultimate reckoning. It creates, as you point out, an umbrella under which they can pursue their favorite fantasies such as global warming measures. Ultimately, as you also point out, it must somehow create a bubble but I have been very wrong for a very long time about the timing of this bubble bursting. Nevertheless, I hold fast to the belief that a reckoning must come and, bad news to conservatives who wish for such a reckoning, the ensuing political upheaval will not favor the virtues of conservatism.

This qualitative easing will probably have the same effect in Europe that is has had in America, lifting the boats occupied by bankers and Wall Street investors but leaving main Street and wage earners treading water. When the reckoning comes, all boats will be swamped if the adjustment is deep and fast enough to sweep away the existing institutions.

[SkyPilot]

So this qualitative easing, this bit of crony capitalism as it were, permits politicians to continue the game by extending the ultimate reckoning.

You nailed it in one sentence.

http://freerepublic.com/focus/f-news/3250178/posts

[Jabba the Nutt]

The economic miracle elixir: print money. Why didn’ anyone think of that before?

[9thLife]

Incredible. It really is like lemmings in slow motion.

I think Weird Al should provide the soundtrack.

[mulligan]

More idiots.

[SkyPilot]

Ultimately, as you also point out, it must somehow create a bubble but I have been very wrong for a very long time about the timing of this bubble bursting. Nevertheless, I hold fast to the belief that a reckoning must come and, bad news to conservatives who wish for such a reckoning, the ensuing political upheaval will not favor the virtues of conservatism.

I read back in 2010 somewhere, from a man who had been heavily involved with the Fed and central banks in the past, that the "PTB" as he referred to them (Powers That Be) could keep up the charade for longer than most people realized. However, just as you pointed out, eventually reality will come in like a tsunami. And what a terrible reckoning that will be for these wicked manipulators. It's been 5 years since he wrote that, and the bubbles (debt, stock market, unfunded liabilities, etc) have grown exponentially.

I give us until September of this year, and then I think we will see a terrible catastrophe.

[SkyPilot]

Most believe Bush had this strategy in place to help the US economy (weak dollar attracts purchases).

I lived in Germany when it went over to the Euro from the Deutschmark. Overnight, the ATM machines in my town spat our Euros instead of Marks. You had a certain amount of time to turn in the Marks in your possession, and then they became souvenirs.

Big parties and celebrations all over Europe when it happened. At that time, as you point out, the exchange rate was such that a Euro would only buy about 80 cents (or so). I could turn in $200 USD and get back more Euros in cash. It also was no "economic elixir" for many in Europe. A beer that was $2 Marks suddenly, overnight, was now 2 Euros. A pair of jeans that was $30 Marks was now $30 Euros. And on and on. It was murder on many families.

Then the Euro started to go ballistic, and I thought (and posted here on FR) that it made absolutely no real economic sense. There were nations in the EU that were either fiscal basket cases, or, were on the edge of becoming debt black holes.

A few people here tried to sell on the "logic" of it, and I was unconvinced. I could tell there was manipulation going on, and I believe that continues to this day.

[SunkenCiv]

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