Monday, October 18, 2010

A Tale of Two Continents

Consider these latest news about the economy in the US and in Europe:

United States:
1. Bernanke Signals Intent to Further Spur Economy - New York Times, (Ben Bernanke), October 15, 2010
2. U.S. Posts Second-Largest Annual Budget Deficit on Record, Bloomberg.com: Economy, October 15, 2010
3. 'Liquidity Trap' Plagues U.S., More Stimulus Is Required, Fed's Evans Says, Bloomberg.com: Economy, October 16, 2010
4. Dollar Declines for Fifth Week on Prospects of More Monetary Easing by Fed, Bloomberg.com: Economy, October 16, 2010
5. Current Deficits Are Not the Problem, Brookings Institution: Recent Research and Commentary, October 15, 2010

Europe:
1. Trichet Says Raising ECB's Inflation Target Would Have 'Disastrous' Effect, Bloomberg.com: Economy, October 16, 2010
2. ECB's Trichet: Euro zone needs stricter fiscal reforms - Reuters, (Jean-Claude Trichet), October 16, 2010
3. Basel III must not sacrifice economic growth - Lagarde - Reuters India, (European Economy), October 15, 2010
4. Speech Jean-Claude Trichet: Global economic governance 
and euro area economic governance, European Central Bank: Press Releases, October 16, 2010
5. 15Oct/Jean-Claude Trichet: Europe's frameworks for macro-prudential oversight and economic governance, Bank for International Settlements: Central Bankers Speeches, October 15, 2010

Two regions with similar (although unidentical) problems, and two opposite diagnostics and sets of solutions. Time will show that only one path was right. Which one? If you read my blog, you know what's my guess.

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