If the Crisis Was Really Over the ECB Wouldn't Be Saying This

I'm meeting more people - typically financial professionals who have a stake in the game - claiming that the economic and financial crisis that began in 2007-2008 has slipped into the past. But if that were so, would we be seeing this?

European Central Bank officials sent strong signals Tuesday that they are willing to consider dramatic steps to guard against dangerously low inflation, suggesting the bank is prepared to shed some of its traditionally cautious approach.

When you read "dangerously low inflation" you can substitute "deflation." They don't say deflation because it would alarm some people. The alarm would sound like this: "Depression...Depression!" You see, if deflation were to pick up steam and accelerate, like a train picking up speed barreling down its track, blowing its whistle at every crossing to signal its arrival, depression would inevitably be its last stop. No central bank will allow this to happen - or at least will die fighting it.

And so it seems that we have to conclude that after six long years since the inception of the crisis, six years of Fed stimulus, with the Fed indicating it will curtail its bond buying (a tool of stimulus), the ECB now turns its attention to...stimulus. It would seem the economies - at least of Europe - simply continue to languish. Not only languish, but apparently teeter on the edge of the abyss of deflation.

At least that's how one can reasonably read this signal from the ECB.

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