As the world awaits what the ECB Chairman Mario Draghi will announce on Thursday, a rate cut or some additional stimulus, the question that needs to be asked is : what is really needed?
With overnight deposits at the ECB running at around Euros 820 Billion, and withdrawls hardly Euros 320 million, I think it is self-evident that the wherewithal for growth in Europe is already there... 819 Billion Euros plus parked in vaults is a fantastic figure! As to a rate cut, it does not seem necessary. At one percent, it is pretty low - otherwise the banks would not find it profitable to lend vigorously, they'll just do inter-bank deals, collect their cut and go for lunch.
The solution which is taking place with improving numbers for the manufacturing indexes (although below the 50 level) is a return to confidence, the confidence to borrow, the confidence to lend, the confidence to spend and the confidence to grow, a confidence to try and balance the books with China and India and Brazil and OPEC, and a confidence to create jobs, confidence to fill up the empty houses, and a confidence to acknowledge that the world system has always existed on credit for further growth, and this generation cannot be any different.
If this generation is fine and we pull ourselves out of this sticky patch where lack of confidence has slowed things down, then austerity will be replaced by an ambience of happiness and growth, sustaining people to their expectations and dreams of a more fulfilling, more promising, more prosperous future.
It is a natural agenda. People on welfare benefits will be happier if work is given to them, which would fill up the empty offices and factories and warehouses and the idling computers.
The world has to fully awake and arise, and not have another recession in the midst of plenty.