EU-DIGEST

ECB- One Trichet is enough, Juncker says

Brussels would certainly be a duller place without the sparkling wit of Jean-Claude Juncker. As guest speaker at a think-tank breakfast on Wednesday, the Luxembourg leader was challenged by an over-excited British questioner to admit that the eurozone economy was in a complete mess. Lest matters grew even worse, the questioner asked, shouldn’t Juncker and his colleagues immediately start arranging the “orderly” break-up of the single currency area? “No", replied Juncker …"Something in my heart is telling me that the British will be happy [one day] to join the single currency.” On the substance of the question, however, Juncker made the point that the disruptions to the individual national economies of the eurozone would surely have been far greater over the past 10 years if there had been no euro.

“Do you really think the European economy would be in better shape if we had had national currencies?” he asked. Would national central banks in Europe have been able to produce a better co-ordinated response than the European Central Bank and Jean-Claude Trichet, its president, had done during the market turmoil of recent months? Then came Juncker’s masterstroke. “Would 15 or 16 Trichets be outperforming one Trichet? I don’t think so. Personally, I really think one Trichet is enough.

Note EU-Digest: without the ECB in place, the European financial system would be in total chaos following what now is shaping up to be the collapse of the deregulated US financial system.

Labels: ECB, EU, Trichet

Trichet Says Shocks Aren't Over for Europe's Economy EU Economy - Trichet Says Shocks Aren't Over for Europe's Economy - by Allan Katz

European Central Bank President Jean- Claude Trichet said the shocks to Europe's economy from financial market turmoil and rising food and commodity prices aren't over, the Wall Street Journal reported, citing an interview. Europe is facing a protracted period of high inflation rates, the newspaper quoted Trichet as saying. Trichet also said the ECB would deliver price stability in the medium term, the newspaper said. The ECB has refrained from following the U.S. Federal Reserve and Bank of England in lowering interest rates to shore up growth after an increase in borrowing costs. While euro-region inflation slowed to 3.3 percent in April from a 16-year high of 3.6 percent in March, it's still above the ECB's 2 percent limit. Trichet also called for a single European market for financial services in order to optimize the central bank's policy instruments and to improve the cohesion of European monetary union, the newspaper reported.

Labels: EU, Trichet

Jean Claude Trichet spells out G7 policy on falling dollar - by Gerard Baker

Say what you will about Jean Claude Trichet, the Monsieur Non of global monetary policy, the rock standing resolutely in the path of lower European interest rates in the face of financial and economic turmoil, but you have to love someone who does it with such lyrical panache.Governments are unlikely to want to throw good euros or yen in the current circumstances after a dollar that continues to be weakened by uncertainty about the state of the US economy.Yesterday, the US Government reported that retail sales rose in the first three months of the year at an annualized rate of only 0.7 per cent. These figures are not adjusted for inflation, which is running at about 3 to 4 per cent, so it is safe to assume that consumption in the first quarter was declining sharply in real terms.

Labels: Economy, EU, Trichet

Trichet's Europe Outpaces U.S., Reaping Reward of Risk Aversion - by Simon Kennedy and John Fraher

As the U.S. teeters on the brink of a recession after the end of a five-year housing boom, growth in the 15 nations that share the euro is poised to outpace the American economy for a second straight year. The region's resilience lets Trichet, who today presides over the European Central Bank's monthly policy meeting, focus on fighting inflation instead of cutting interest rates. Because Europeans save more than Americans and splurge less on houses and stocks, the continent is better placed to withstand the global credit squeeze without the need for lower borrowing costs.

``To be thrifty is a good thing and definitely a plus for the European economy in this tough period,'' said Jean-Michel Six, chief European economist at Standard & Poor's in London. ``The attitude to debt and credit is clearly very different between the U.S. and Europe.''

Labels: EU, European Economy, Trichet