When the Chips Are Down

The Economist, June 23, 2012

Central banks:

When the chips are down

Frankfurt–The European Central Bank has unlimited firepower and limited inclination to use it.  The first of two articles on central banks explains the ECB’s thinking.  

“In 2008 and 2009, policymakers impressed markets with decisive action. Central banks moved swiftly to slash interest rates and extend liquidity, beefing up balance-sheets in the process.  Governments launched big stimulus programmes.  The G20 meeetings were a signal of a concerted determination to act.  

Things are different now.  At this week’s G20 summit in Mexico, more fingers were pointed than backs slapped.  Many governments are intent on tightening policy, not loosening it…  But, maddeningly, the institution that needs to do most–the European Central Bank–is hanging back even as the pressure on countries like Spain, whose sovereign-bond yields rose to euro-era highs this week, intensifies.” 

Gambling uses chips and so, apparently, do banks, but it depends how one plays them, and if they play them, or hold them back, waiting…

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