Europe Needs the Fed’s Medicine
One of the great ironies of the post-Lehman Brothers financial crisis is that the euro, a currency much of Wall Street thought unable to survive the storm, became a haven.
The reason was simple enough: The European Central Bank was the only one in a major developed economy to abstain from quantitative easing. By refusing to follow the U.S. Federal Reserve, the Bank of England and Bank of Japan in flooding markets with the currency that it managed, the ECB ensured that the euro remained strong, even when its future was in doubt.
That decision -- Paul Krugman and other advocates of stimulus always and everywhere aside -- was a good one, given the risks the euro faced.… Seguir leyendo »