Courtesy of Mish.
Yesterday, President Obama gave a State of the Union Address that contained a series proposals for US Congress on raising taxes, free education, and carbon taxes.
I commented Obama Howls at the Moon.
Every Obama proposal is Dead-on-Arrival. Obama may as well fired a spaceship at the sun. The spaceship would melt long before it got there.
Draghi vs. Obama
On Thursday, in just a few hours, ECB president Mario Draghi gets his “moment in the sun”. And like Obama who telegraphed his speech in advance, rumor has it ECB Eyes €50bn Monthly Bond Purchases.
So What?
Many may be wondering “Can it possibly matter?“
Actually, it does matter, but only in the negative sense. As Steen Jakobsen chief economist of Saxo Bank in Denmark explains “Euro is Not a Good Idea and ECB About to Make Biggest Mistake in History” .
Steen’s rationale, fully explained in a subsequent post is that Lower Interest Rates May Reduce Consumption. That is a proposition that Michael Pettis at China Financial Markets and Lacy Hunt at Hoisington Management both agree with.
Lacy Hunt pinged me with this thought “Academic research indicates that QE in the US contracted rather than expanded economic activity, just as it did in Japan. Thus, Steen could have made the even stronger case that since it didn’t work in the US or Japan, it will not work in for the ECB.“
For a detailed explanation, please see Grand Experiment Failure; Bankers Prefer Bubbles; Europe is not USA; Final Epitaph.
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