It’s not unreasonable to suggest that Bernanke is setting the stage for a new round of QE. Growth at 2.7 percent is insufficient to significantly reduce unemployment.
With growth slowing and fiscal deficits widening, the EFSF isn’t big enough to stop the contagion. We think Europe’s outlook will deteriorate until a strong new source of confidence is introduced – though two powerful ones, ECB bond buying and U.S.-style blanket guarantees for new bank debt, aren’t on the table.
If the world applauds self determination, they would certainly applaud Papandreou’s action.
With China slowing, the US slowing, and much of the rest of Europe in widely-recognized contraction, the vaunted German export machine has a shrinking pool of able and willing buyers.