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Remember Philipp Hildebrand? ‘Bout yea high? Firecracker of a wife? Had to step down as head of the Swiss National Bank because in between hedge-fund managing and art-dealing, said firecracker couldn’t resist the franc-dollar spread that her husband was helping create?
Well, Phil’s clearly itching to do some central banking again. And since he’s not allowed to do any actual central banking, he’ll do some back-seat central banking on some salmon-colored newsprint. And while he admires his fellow retiree Ben Bernanke, he just thinks Europe could be a little more European about how it solves its myriad problems.
Bond yields are already at record lows; reducing them further is unlikely to stimulate investment in an economy that, unlike America’s, is still funded largely through the banking system rather than the bond markets….
That a bond-buying programme is unlikely to succeed is not, however, the reason why it should not be tried. After all, another lesson from the crisis is that in the face of impending disaster, you should try different approaches until something works….
The Fed’s bond-buying programme appears to have contributed to the recovery of the US economy. But Europe’s growth problems are different. They lie in the structural ills of the French and Italian economies, and the continuing ill health of the eurozone’s banks.
No amount of QE will cure this malaise. Europe needs its own ideas. It cannot simply copy the Fed.