Why central bankers can’t really fix the mess they created [ArabianMoney]
July 31, 2012 Leave a comment
Is it not amazing to see the S&P 500 index up 10 per cent for the year when all the indications point to a slowdown in global economic growth with the European credit system seizing up, US slowing and the Chinese economy entering a hard landing phase.
Yet the markets behave as though the central banks are in control of the situation. Just a few words from these masters of the universe are enough to rally a falling market, or the merest whiff of policy easing.
Next week ECB President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in what officials hope will clear the way for a new raft of measures including bond purchases. German Chancellor Angela Merkel, French President Francois Hollande and Draghi have pledged to do everything to protect the euro. Would you expect them to walk away?