Lend to spend. First FED and now ECB

The year 2011 ended with a bearish view and sentiment for the EUR, well motivated. Several member nations have more debt than healthy and the cost for borrowing has increased to unsustainable levels.

Also the austerity that’s needed doesn’t seem to have taken place in neither Greece nor Italy.
The same mood has continued into the new year 2012, but turned around a little bit late this week.

The European central bank is the reason why. By stimulating the market with more liquidity, ECB has succeeded to lend money, not bilateral but by detours, to the troubled countries at much lower interest rates than before. It may help in the short run, but one can wonder if it’s not only a way to push the problem forward.

Furthermore, the leaders for the two economic engines of Europe, Germany’s Merkel and France’s Sarkozy, have had several meetings and though not much has been presented they are repeatedly unified and state that the Euro will hold.