The European Central Bank took a play from the Federal Reserve early this morning in approving a massive bailout of the “weak” economies of Europe. The move intended to “defend the Euro at all costs” was a shot heard round the world as markets rallied on the news. READ HERE
The problem is that the European euphoria sweeping global markets is a short term fix to a long term problem. The long term to solution is to reign in spending – not to spend like drunken sailors – or enact legislation that hampers market movements. The E.C.B. needs to develop serious programs that address the serious problems that have wreaked havoc on the economies of Greece and other weaker nations in their network. The E.C.B. has found a way to prolong the problem by bailing these nations out with its massive cash infusion. It has not however, come up with a solution to make sure it does not happen again.
The E.C.B, instead of copying the misdeeds of the Federal Reserve, should have learned from the Fed’s mistakes and not have added so much debt on its member nations. Remember the U.S. economy is still quite weak, the unemployment rate is nearly 10 percent and our debt is higher then ever before in the nation’s history. By bailing out its member nations, the E.C.B has thrown quite a bit of water on a raging fire, however, the embers are still smoldering and are sure to spark up in the future.