Jean-Claude TRICHET
I do not like this guy. I didn’t like him before 2008 and I do not still like him. I didn’t like him in July 2008 when it was clear to everyone, apparently not to him, that the European economies slowing down and the debit crisis intensifying. I still remember that July when the ECB raised the benchmark interest rate to 4.25 percent from 4 percent.
I could not believe that “I was said to myself: How could be this possible? Why Trichet is making this big mistake.” My poor mortgage with an interest at variable rates that already was giving me hard time before 2008 with a new higher rate in July reached 1000€ when in September 2005 was only 500.
This below is a paragraph from New York Times, August 5, 2011: Euro Builder Ends His Career on a Bitter Note
source: http://www.nytimes.com/2011/08/06/business/global/jean-claude-trichet-builder-of-the-euro-ends-his-career-on-a-bitter-note.html?_r=1&scp=12&sq=ECB&st=cse
“If this is all part of a single objective, then how can you turn one lever toward the right and one to the left?” asked Marie Diron, an economist in London who advises the consulting firm Ernst & Young and previously worked at the central bank.
With European economies slowing and the debt crisis intensifying, critics say, the central bank is making the same mistake this year that it made in July 2008. Then, the bank raised the benchmark interest rate to 4.25 percent from 4 percent even as the financial crisis was gathering force.
After the collapse of Lehman Brothers only two months later, the bank was obliged to throw monetary policy into reverse, lowering the rate to 1 percent by May 2009. It has been at 1.5 percent since July.
To be fair to Mr. Trichet, who declined through a spokeswoman to comment for this article, he has a more limited arsenal of policy tools than Ben S. Bernanke, his counterpart at the Federal Reserve. The bank charter would not allow it to flood the economy with money the way the Fed has done through its huge purchases of securities.”
I still do not like him because just few months ago Trichet raised the benchmark interest rate twice. Big mistake again for million of people like me who have a mortgage with an interest at variable rates. My mortgage payment again, in April 500€ now in August reached almost 600.
“The bank’s interest-rate policy has also drawn scorn, with critics calling it deeply inconsistent. The bank has raised the benchmark interest rate twice since April to prevent inflation in fast-growing countries like Germany and the Netherlands. At the same time, the central bank has pursued a loose monetary policy in weaker countries like Greece and Ireland by allowing banks there to borrow central bank funds cheaply. On Thursday, amid signs of serious tension in the interbank markets, the central bank expanded the availability of low-cost loans to bank“.
This is another article appeared on Repubblica.it July 29, 2011: Crisi, mercati a rischio liquidità 
serve un taglio dei tassi della Bc
source: http://www.repubblica.it/economia/2011/07/29/news/analisi_mercati-19780325/index.html?ref=search
I am copying here only the last two paragraph:
“insomma si sta mettendo in moto una spirale negativa che rischia di bloccare tutta l’economia. Le stime sul secondo semestre di crescita del Pil italiano cominciano infatti a diventare nel pgative: a fine 2011 potremmo avere una crescita vicino allo zero. Ne deriverebbero anche minori entrate per lo Stato in termini di tasse e imposte e di conseguenza un peggioramento del bilancio pubblico. Insomma una vera e propria sciagura che può essere interrotta, forse, da un brusco taglio dei tassi da parte della Bce, in modo da far affluire piĂą liquiditĂ sui mercati. Ma la Bce, al contrario, li ha appena alzati di 0,25 punti, per il pericolo dell’inflazione che in questo momento sembra veramente l’ultimo dei problemi. Vedremo se con Mario Draghi al vertice dell’istituzione monetaria europea la musica cambierĂ .”
Question: ECB is so worried about inflation and raise the Interest rates???
The Fed Reserve is doing exactly the opposite: Chairman Bernanke at the Press Conference on June 22, 2011 said that (FOMC:FOMCpresconf20110622) it will maintain the short-term interest rates at an exceptionally low level for an extended period without saying until when. (http://www.federalreserve.gov/mediacenter/media.htm)
Just yesterday August 9, 2001 made a promise to hold short-terms interest rates near zero through at least the middle of 2013, in a sign that it has all but written off the chances of an expansion strong enough to drive up wages and prices.
(http://www.nytimes.com/2011/08/10/business/economy/fed-to-hold-rates-exceptionally-low-through-mid-2013.html?_r=1&scp=2&sq=FED&st=cse)
Now I hope that the ECB will reduce the interest rates in Europe. I hope this for the millions of family who have a mortgage.
