Emergency Manoeuvers; Central Banking and the Crisis  

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Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 400 no. 8746 (Aug. 2011), page 57-59.
Topik: Central Banks; Monetary Policy; Securities Markets; Credit Ratings; Sovereign Debt; Economic Conditions; Currency Devaluation

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.67 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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On August 8th the European Central Bank (ECB) began buying Italian and Spanish bonds in an effort to stop the sovereign-debt crisis from crippling two of the continent's largest economies. And a day later America's Federal Reserve made an unprecedented commitment to keeping interest rates at more or less zero for two more years to keep a stalling economy out of recession. In both cases the dramatic steps were taken in the face of political failures to get to the heart of the problems at hand. The big issues of America's stagnant economy and Europe's debt crisis remain in the hands of elected politicians who still seem inadequate to the task. But at least central banks have shown themselves ready and able to act. Although the dramatic sell-off in equity markets over the past week had many causes, the most important was the darkening outlook for the American economy. The jobs report for June, released on July 8th, was shockingly weak. On August 5th Standard & Poor's, a ratings agency, lowered America's credit rating from AAA to AA+. Bank stocks were particularly hard hit in the wake of the announcement, which will make bankers even more guarded about how much they lend. A weaker dollar need not push up prices elsewhere, as long as policymakers outside America do not try to follow the dollar down. The sharp equity declines in August suggest investors understand the grim reality of a long period of slow growth.

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