The Chairman of the Federal Reserve has signaled that there may be more quantitative easing. At a conference in Jackson Hole, Wyoming, Ben Bernanke talked about the “wealth effect” of quantitative easing, with its potential to keep interest rates low while supporting stronger equity and commodity prices. Next, we look at an article indicating that the U.S. manufacturing sector is continuing to slow down. Showing that this is part of an international trend, we follow with an piece about the European Central Bank (ECB), which is considering its own version of quantitative easing. The ECB meets this Thursday to discuss the issue further. Our final article focuses on Germany, the largest economy in the region, and how it is being affected by the European debt situation.
Bernanke Edges The U.S. Fed Toward More Stimulus – Federal Reserve Chairman, Ben Bernanke, used his widely followed Jackson Hole, Wyoming, speech to signal the likelihood that the Central Bank will launch a third round of quantitative easing. The question now remains as to whether he will do this during the Fed meeting on September 12th and 13th or wait until a later date this year. http://articles.marketwatch.com/2012-09-01/economy/33533652_1_jackson-hole-bernanke-context-of-price-stability
U.S. Manufacturing Posts Sharpest Drop In Three Years – U.S. manufacturing activity in August contracted the most in three years, according to a survey by the Institute for Supply Management. It was the third consecutive month of decline, the longest period of slow down in the sector since the recession ended in 2009. http://www.bloomberg.com/news/2012-09-04/ism-index-of-u-s-manufacturing-decreased-to-49-6-in-august.html
European Central Bank President Urges Buying Sovereign Debt – European Central Bank President Mario Draghi recently presented his case for buying the bonds of financially troubled euro zone countries. This is the same type of quantitative easing that the U.S. Federal Reserve has used two times already. http://in.reuters.com/article/2012/09/03/ecb-draghi-idINL6E8K3L6G20120903
Germany’s Economy Continues To Slow Down – Europe’s debt problems are starting to have a major effect on Germany, the region’s biggest economy. Orders for German exports, the country’s economic foundation, posted their biggest decline in three years in August. http://www.spiegel.de/international/business/german-export-orders-fall-in-august-in-sign-of-economic-slowdown-a-853614.html
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John R. Day and Bill W. Ennis