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Tuesday, July 31, 2012

The European Central Bank (ECB) seems to be running out of options to resolve the Euro crisis. It has cut down interest rates to 0.75%. It has bailed out the troubled nations but their troubles are far from over. It gave cheap funds to the European banks to bail them out. But nothing seems to be working. All of its efforts can at best be described as short term fixes. Now it appears that it would use another option, that used by the United States. It plans to come up with a quantitative easing and print money to bail the Euro zone out. The ECB President has hinted that he may look at buying sovereign bonds in the zone and in effect pump money into it. However, before planning it, he has to get Germany to agree to the plan. But we feel that someone needs to go and tell the ECB President that money printing is again nothing but a short term fix. In the long run, it really does not help much. Something the US realized after embarking on two rounds of quantitative easing.


 

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