Seth wrote:
>Dennis Redmond wrote:
>> My own feeling is that those low EU interest rates are
>> the perfect rocket fuel for a genuine Eurobubble some time in the
Noughts
>>
> What low EU interest rates do you have in mind?
>
> I don't know where you keep getting this idea that the ECB is
>running a loose monetary policy, Dennis, but I think you have the wrong
>idea. Are you gonna make Doug have to trot those IMF figures out again?
Hmmm ... not a "loose policy", but short term rates are much lower in EU than US -- 2.45% vs 4.82% for 3 month interbank money as I type. At the long end, it's less clear -- 5.25% EU vs 5.92% US. But that seems to me a reflection of poor credibility on the part of the EU rather than any signs of incipient inflation (of which there are none). And that would suggest that the long end will come down over time, as the hard money nuts at the ECB begin to show their colours. So I'd say that, since the ECB is not actually choking recovery in the EU, it would count as a "loose policy".
But I'm not sure about the "Eurobubble" thing -- it's way to early to tell, and our central bankers have much itchier trigger fingers than the Fed.
dd
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