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Macro chatter: Now it really might be time for QE next

Around the world in business: A top Fed official talks about doing more for the US economy, China cuts interest rates, and Europe gets a lot of bad and a piece of good news.
Commerzbank 2012 02 08Enlarge
Although Germany had enjoyed record-breaking exports in earlier in the year, the end of 2011 revealed a less optimistic reality. "It was a bad December through and through," Ulrike Rondorf ,an economist from Germany's second largest bank, Commerzbank, told AFP. Commerzbank was downgraded by Moody's on Wednesday. (DANIEL ROLAND/AFP/Getty Images)

Need to know:
The QE next talk is growing louder.

The Fed’s no. 2 official suggested it might be time for the US central bank to do more to support the world’s largest economy.

Janet Yellen, the Fed’s vice chair, suggested continued trouble in the housing sector, a lackluster job market and generally worsening financial conditions could force the Fed to act. 

“It may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest," she said at a speech in Boston.

Fed Chairman Ben Bernanke is scheduled to appear on Capitol Hill today.

Want to know:
For all the bad news there is about Europe’s economy these days, there may be at least one bright spot. Chinese investment in Europe tripled to $10 billion last year, according to a study cited by the Associated Press.

The Rhodium Group expects Chinese investments outside its borders could grow to $2 trillion by the end of the decade.

Of course, Europe will face stiff competition in courting China. The US and other governments also are clamoring for more investment yuan from China, which is battling its own economic slowdown. 

Chinese officials cut interest rates for the first time in four years to spur growth.

Dull but important:
It’s been yet another tough week for European banks, and this time its Germany that’s in trouble.

Moody’s has downgraded six German banks, including the country’s second-largest lender Commerzbank.It also cut ratings on three Austrian banks.

Moody’s is worried about what the ongoing euro crisis could do to the banks’ financial positions. 

Just because:
AIG CEO Robert Benmosche may think Europeans should work longer before retiring, but France doesn’t agree.

French President Francois Hollande is planning to lower the retirement age to 60 for some workers, which could make things tougher for the French economy.

French people, though, are probably pretty happy. They protested when former French President Nicolas Sarkozy increased the retirement age from 60 to 62 in 2010.

Strange but true:
Will Smith and Tommy Lee Jones aren’t the only Men in Black.

Apparently, international financial officials also wear black when they parachute in to push budget trimming at bailed out countries.

Spain’s budget minister is trying to reassure the country that these non-Hollywood men in black aren’t headed its way, my colleague Paul Ames reports.

He may have a tough battle ahead of him: Spain’s got a huge banking problem on its hands and may not have the money to solve it alone.
 

http://www.globalpost.com/dispatches/globalpost-blogs/macro/macro-chatter-now-it-really-might-be-time-for-qe-next