The Waiting is Over – We Hope

Thursday, May 7, 2009

The European Union cannot catch a break. You would think that the week long news of this looming rate cut and speculation on stimulus by the European Central Bank would have been traded out already, and perhaps it has. But with Germany coming in with a 2% constriction in economic activity coupled with a Standard & Poor’s rating cut for five of its banks the Euro just has nothing to look forward to right now.

Add into this mix the speculation that England might need to start printing more money and it does not look good on the European side – no matter what the stock markets or flip-flopping analysts say.

Look for the Japanese Central Bank to try and boost interest in the ailing currency, only safe haven flows have sustained the Yen as of late. The only thing that can keep the island nation afloat is their exports and right now there are none.

So today we find out which US banks are in trouble and we find out what great pplans the ECB has for their economy. My bet is that it will pass with disappointment and we will wonder what we were talking about for the past two weeks. The US Banks are in trouble, this is established – and word has it that 9 or 20 large banks need capitalization, the news is out and nothing has happened.

The ECB will lower rated to 1% and announce a passive plan today which they will tout as aggressive. It will make us wonder why they had all the infighting in the newspapers the past few weeks – it will make us wonder what is truly going on in their minds. IT will make us think that all is well – however when you look at the numbers you can see that all is not.

For me, the important date is tomorrow – when more unemployment data in the US is released. This will be telling – and no matter how bad, I guarantee, there will be some rays of hope that some politician or economist sees. 1 out every ten people without a job is not good – watch them make us believe that it is.


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