The global economy is in a such a jam right now. There is no consensus on how to move forward. The political leadership in the US is divided and it is the same in Europe. The Central Banks are not sure how to move forward. I think the on-going G7 summit is not going to come out with anything significant. The resignation of Juergen Stark, ECB Executive Board's member, highlights the conflict within the Bank (Channel 4 news). Officially he has resigned due to personal reasons, but there there are reports that suggest he was against the Bank's buying of European govt bonds. In such a complex and sensitive situation, all the economy needs is a push either way.
Obama tried with his job creation package to pull back the economy, but Krugman thinks Obama has a near zero percent chance of getting the bill passed (The Economic Times). A push in the opposite direction right now seems likely. And this could come from a Greek default. Don't know how the Greeks are going to continue to push away the inevitable default. The chances of a default today stand at 90% (Bloomberg)
Saturday, September 10, 2011
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