Trichet vs Bernanke

some useful backstory:

http://news.google.com/news?hl=en&ned=us&q=jean-claude+trichet&ie=UTF-8

Essentially there is a difference in climate in Europe Trichet can operate secure in the knowledge that european governments will bail failed banks out. Bernanke's brief seems to be to slacken off monetary policy enough so they don't fail in the first place.

Long-Term Capital Management? Bear Stearns? I doubt in the current climate that the U.S. would be any more likely to let a large bank fail than the Europeans...

But the climate is more hostile to state rescue of banks. Low interest rates provide a climate where it is much easier for strong banks to rescue the weaker ones.

RFC: I Love Economics

Bernanke scared of 1931 Trichet scared of 1923?

Bernanke now talking of how weak dollar will fuel inflation (uhh well who pushed the panic 0.75 cut plus the other cuts?) - just rhetoric from him - talking tough(ish) on this but considering he just cut them not good for his credibility

Can they afford to go different directions on this or is one going to have to buckle and follow the others path?

I think they can afford to go different directions, europe's exposure to sub prime is less and the precedent has been set for governments to nationalise failed banks. Remember the US is struggling with a much more adverse balance of payments deficit and devaluation is helping with this, how long before the dollarsphere decouples will determine just how effective it is although chinese inflation rates show that this is happening whether they like it or not.

different actions for different reasons

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ECB raises 4.25 -- where does this leave Ben?

Is Trichet's protection of the Euro acting kind of like a gold standard - limiting the feds ability to cut anymore? (Were they going to cut any more? - what the fed talk isn't really that good a guide to what they might do)

Bernanke's brief seems to be to slacken off monetary policy enough so they don't fail in the first place.

-- Ed, Tuesday, June 17, 2008

Marc Faber thinks up to 150 US banks may fail(!)