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Today’s positive surprise on non-farm payrolls (+151,000 and +110,000 of revisions to past months) has prompted the first round of what I’m sure will be a popular new game: second guessing the size of QE2 based on incoming US economic data.
A note from Chris Rupkey at BoTM says:
The Fed has announced that it will buy $600 billion of Government securities through next June… but if payroll jobs keep growing at the current rate, we would be surprised if they need to complete the entire amount of these announced purchases.
Footnotes are often more revealing than the main text. That is certainly the case in a research paper just published by the European Central Bank, authored among others by Jürgen Stark, a member of its executive board. Entitled “the benefits of fiscal consolidation in uncharted waters,” it makes the case for immediate and sweeping fiscal consolidation in Europe.
So far, not particularly surprising – given the ECB’s oft-repeated calls for budget prudence and its argument that fiscal consolidation can in fact be positive for growth. Mr Stark is known as a fiscal as well as monetary “hawk”.
But the paper goes further in its conclusions. Read more
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