ECB Faces Challenge of 2 Europes: 1 Booming, 1 Broke

Discussion in 'Economics' started by Kassz007, Apr 7, 2011.


    "The European Central Bank raised its key interest rate Thursday for the first time in nearly three years as it signalled its determination to fight inflation, even as some euro member countries still struggle with debt crises and high unemployment."

    "On the one side, Portugal is set to join Greece and Ireland in taking a rescue package and Spain is struggling with a 20 per cent unemployment rate. On the other, countries like Germany are enjoying robust growth, booming exports and falling unemployment; leading economic institutes are predicting that the jobless rate will average only 6.5 per cent next year, and that's including the former East Germany's lagging economy."

    "Some parts of southern Germany have unemployment rates at 4 per cent or lower, and skill-intensive jobs are going begging. Those numbers indicate that some parts of Europe's biggest economy maybe on the verge of overheating and that's a recipe for higher prices.

    Because the European Central Bank's mission is to control inflation, it is raising rates, even though that will put more pressure on hard-hit consumers with mortgages and the collapsed real estate markets in the so-called peripheral countries."

    "The ECB is charting a different course from the U.S. Federal Reserve , which has not yet signalled readiness to begin raising rates from the current rock-bottom 0-0.25 per cent.

    The Bank of England's monetary policy committee left rates untouched at 0.5 per cent at its meeting Thursday even though inflation in Britain is running at 4.4 per cent."

    "With the periphery of Spain, Greece, Portugal and Ireland combining for less than 20 per cent of euro area GDP, clearly the ECB's focus is predominantly elsewhere."

    What is a CB to do?
  2. Actually the problem is a lot deeper than that. The debt in Eastern Europe is much worse than you think. Perhaps they could split it like Rome did into East and West. The East ended up more powerful.
  3. Ditto the US of A = EU

    What's the difference?
  4. Why are you so anti european?
  5. USD index sinking...."captain we hit a debt iceberg and the pumps can't keep up, we are going to sink"..........EU is far stronger than US as it has Germany at the core.

    US is broke period.
  6. d08


    He went to Europe and Europeans made fun of him.