I didn't know whether to laugh or cry when I read this. Jean-Claude Trichet, president of the EU Central Bank, remonstrating the Obama administration for all the chatter about economic stimulus-- much in the form of growing the welfare state-- at the expense of the 800 lb. Gorilla in the room: frozen markets. According to the article, European leaders like Trichet are distancing themselves from the Obama administration's economic stimulus strategy by claiming that "their more-generous social-welfare states provide a buffer that offsets the need for bigger fiscal boosts." In other words, do the welfare thing later. Fix the markets now!
And "Mr. Trichet also warned that if governments went too deeply into the red, the move could backfire by pushing up long-term interest rates and puncturing public and business confidence."
Wow. Sounds like the EU's got the pragmatism here. Good for us that Tim (do I still have a job?) Geithner released his proposal to unfreeze lending by buying up to 1 trillion in toxic mortgage-based assets today, using partnerships with private investors. Wall Street responded with a 500 point jump in the Dow, as I'm sure everyone is now well aware.
Maybe Obama can have Trichet over to the White House sometime to get some pointers on how the markets really work, and what really fixes them.
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