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Europe’s Hail Mary Pass


Founding Member
Board Elder
Site Mgr
Midas Supporter
Mar 25, 2010
Europe’s Hail Mary Pass
Posted July 7, 2019, 5:05 pm

Europe took competition to a new level last week in the global currency-devaluation olympiad. Nominating the politically-minded IMF chief Christine Lagarde rather than a blue-blooded financier to run the ECB is akin to making Trump chairman of the Federal Reserve. No longer can we pretend that the staid protocols of old-school banking still obtain in the financial realm. Instead, there is a strong whiff of desperation as Europe readies a last-ditch attempt to stimulate itself out of a liquidity trap with the ECB’s deposit rate already at minus 0.4%.
No one could possibly believe that bringing rates down even deeper into negative territory will have a lasting impact on the intractable unemployment, anemic economic growth and coming deflation that threaten to snuff prosperity in the eurozone. The alternative is to turn the region into a fiscal-spending free-for-all by lending promiscuously to the likes of Italy, Greece and Spain. Presumably, this would come with Germany’s reluctant assent and the feckless instruction, “Go to town, guys!”
Powell’s Dilemma
This is unfortunate for Fed Chairman Powell and his nascent plan to propagate yet another QE blowout. He’s practically had his arm twisted off by easy-money advocates and, having donned the knee pads that came with the job, is ready to do their bidding. But now, try as he might, it will be difficult to force the dollar lower. He’ll have to settle for mere asset inflation in the U.S., as though there weren’t enough of that already, and scant hope of shrinking the trade deficit. Not that anyone will much care. Higher share prices will continue to obfuscate a multitude of sins, allowing Wall Street to revel for yet more weeks/months/years until the deepening economic woes of our trading partners, including China, eventually hit home.


2 comments… add one

Ambrose Bierce July 9, 2019, 11:22 am
I like the LBJ comparison, March of 68′ he withdrew He was a popular president at the time.
John Jay July 8, 2019, 1:22 am
I think POTUS Trump has lost his perspective on the Fed/Interest Rate situation.
“President Donald Trump criticized the Federal Reserve for raising interest rates, claiming that economic growth in the U.S. would have been higher than 3% and the stock market would be 7,000 to 10,000 points higher.”
Let’s see if President Trump gets tough with Powell, in the LBJ style with Fed Chairman Martin…………………………
“Johnson had pushed Kennedy’s economic policies to their logical extreme. In 1964, he had delivered a powerful fiscal stimulus by signing tax cuts into laws, and he had proceeded to bully the Federal Reserve to keep interest rates as low as possible. When the Fed made a show of resistance [in 1965], Johnson summoned William McChesney Martin, the Fed chairman, to his Texas ranch and physically shoved him around his living room, yelling in his face, “Boys are dying in Vietnam, and Bill Martin doesn’t care.”
Oh hell, why not?
I myself am anticipating some major fallout from the demise of Deutsche Bank, who might layoff 20,000 bankers and exit lots of trading businesses.
I think it will get worse for them as the days fly by.
Not to mention Trade Wars, Iran uranium enrichment, UK hi-jacking an Iranian oil tanker, Putin staying put in Venezuela, with our “Interim choice for their President, Mr. Guaido, nowhere to be found, Jeff Epstein likely to name names to save himself, ……….
My, things are just bad all over these days!


Old Member
Gold Chaser
Site Supporter
Apr 13, 2011
Didn't LeGuard take over because the guy who was going to get the job was set up?
Some maid was involved, not really but that's the story line

I don't trust these european leaders any more than I trust my own