The conventions of central bank independence dictate that the bizarre behavior of the European Central Bank not be discussed at the G-20 meeting, but with the ECB cutting rates by less-than-expect, bank chief Jean-Claude Trichet seems to be continuing his campaign to drag the world into years of depression.
This whole issue continues to be generally under-discussed. It’s widely understood in the United States context that Ben Bernanke is one of the very most important economic policymakers in the country. He’s probably the number two guy after Barack Obama. But the Eurozone’s economic output is about the same as that of the United States—it varies according to the exchange rate of the day. This means that Trichet is about as important as Bernanke, and probably more important than any of Europe’s elected officials. He’s a top-five guy in terms of determining the economic fate of the globe. And he’s a rare dissenter from the general view that the current downturn is a true crisis that requires emergency measures. This is a big deal and, if he’s wrong, a very big problem.
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