Trichet and his compass

The current expectation is a 50bps cut by the ECB today. Is this the right move?

We've seen Chinese exports drop rapidly, US import AND exports fall dramatically, DBK with a horrible set of results and poor comments from JPM, Citi's carve up in place, all of this is a marked difference from the first week of the year. The Raven finds it pretty hard to imagine that we don't see price deflation in the Eurozone, so we've seen the ECB miss the inflation target on the upside and now in all likelihood on the downside, (yes that is a sounds of a long slow sarcastic clapping). With the German economy so export driven and dependant on the auto industry the Raven finds it hard to imagine that the Euro provides much value against GBP or the USD, given the expected rise in unemployment.

Interesting to see that the UK press has seen an increase in calls for "buying British", this is frightening when put into the context of Hawley-Smoot, it would be a disaster for an increase in trade barriers globally - the Raven wonders what the long term political consequences would be for the Chinese - USA relationship if they fell into a trade war?

The other "interesting" chatter thats been swirling for the last couple of months is the prospect of the UK joining the Euro, not only is this idea a political non-starter but justn't square economically.