The competitive issue cannot be solved with money alone

The Telegraph - The European Central Bank (ECB) said loans to the real economy fell in February, scotching claims that radical long-term refinancing operation (LTRO) would stem the crisis.

Open Europe's Raoul Ruparel said: "The LTRO has succeeded in avoiding a severe funding crunch...[But] it does not tackle the underlying lending risks which the banks are still keen to avoid, particularly with the looming recession in Europe."

Banks are not lending because they know full well that the countries in need of money have a huge trade deficit. In other words they are not creating the wealth to pay back the debt.

Money alone does not solve the problem of relative competitiveness and lack of a market mechanism to make exports cheaper - not necessarily better.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

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