Quotable
Be near me when my light is low,
When the blood creeps, and the nerves prick
And tingle; and the heart is sick,
And all the wheels of Being slow….
Tennyson
The Eurozone movie we’ve been watching is starting to look eerily familiar.
Of course, I am referring to the similarity between the economic and monetary path in the Eurozone to that of Japan during its many years of deflation. Mr. Draghi has strenuously argued the Eurozone is not at all like Japan and inflation will indeed pick up, especially now given the ECB’s decision to move to negative interest rates on bank deposits and lowered benchmark rates.
But are deflationary pressures in the Eurozone really all about money?
I don’t think so. I think the problems are structural and go much deeper than merely creating more liquidity. But what I am most concerned about is this: How will Europe’s single currency react if the zone is following down the path Japan has blazed?
Jack Crooks
President, Black Swan Capital
