Trichet: I did it my way

JCT, speaking at Jackson Hole Saturday, said that criticism of the ECB for being behind the curve on interest rate cuts was misplaced. “A gradualist approach of this kind may be the most effective antidote to the threat to price stability,” he said. That;s a bit of revisionist history, as price stability was the furthest thing from the central bankers minds in September, October of last year. They were trying to avert the collapse of the global financial system. Whatever! At the end of the day, Trichet and the ECB quantitatively eased with the best of them, and Europe is stirring out of recession. On balance, the central banks have done a nice job of averting catastrophe. Now they need to be nimble in removing the massive amount of liquidity sloshing around in the system. So far, most of it has ened up on deposit right back at the central bank, making it easy to drain.

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