The ECB cuts its interest rate

Yesterday the ECB cut its interest rates from 0.75% to 0.50%. It’s the first cut by the ECB in as many months and it is quite interesting because Germany has all along been opposed to any further expansionary policies be it monetary or fiscal and this latest move by the ECB means that the majority of the Eurozone members are finally making bold steps to get their economies on the right footing.

There is something which I find quite puzzling about European policy-makers. They are pushing for monetary expansionary policies and fiscal austerity at the same time. What this implies is that the financial services industry gets help from the authorities to recover from the Great Recession/Lesser Depression by getting cheap loans and having their semi-toxic financial assets purchased for by the authorities at a good price considering that they are basically worthless given how illiquid, the market is currently.

On the other hand, the workers and general public who depend on government services suffer because of the austerity policies being put into effect. It’s hypocritical and the Europeans are ignoring empirical evidence which suggests that fiscal expansion should take a more prominent role in the efforts to get Europe out of the slump it is finding itself in.

The World in a Flash….

Recently I have been posting quite a few posts and its not like I’m losing interest in blogging but just that something has been preoccupying me recently. Anyway on the international scene the Reinhart-Rogoff debacle is still ongoing and the Eurozone is still the sick man of the world. These are some of the things I want to share with my followers now and again. But eishh that’s life and I will just have to let it roll.

French Elections.

With the French Presidential Elections coming up (1st round - 22 April 2012), it will be worth noting how a Sarkozy defeat will change the dynamics of Europe and the World. Of course, the one most likely to defeat him is Socialist, Francois Hollande. Given the central role France has played in regime change agendas across the world (including Europe) in recent times from Ivory Coast to the Arab & North African countries. Even European governments had to face the bullying tactics of France and Germany under a failed policy of austerity. Governments have changed in Italy, Spain, Greece among others. A change in government in Franch will be a relief for many because of the scorched earth policies Sarkozy at al have been using. This will definately change France's relationship with Germany whose Chancellor Angela Merkel has unconventionally endorsed her partner Sarkozy. It will result in a rethink in the austerity policies Europe has been following religiously (hopefully in a positive direction). Sarkozy's hypocritical policies in the Arab Spring have regressed France backwards in contrast to how independent-thinking Chirac had been eg the Iraq issue.

Henceforth a Sarkozy defeat is progressive in my opinion.