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| Barry Ritholtz (Photo credit: Michael Covel) |
The ECB meets tomorrow and is expected to announce its biggest bond-purchasing program to date in an effort to finally turn around the European credit crisis. Federal Reserve policymakers meet next Wednesday and Thursday to decide their next move to revive a still sluggish economy.
Fed purchases of U.S. government bonds currently dwarf ECB purchases of European sovereign debt: $1.6 trillion compared 211.4 billion euros, which is equivalent to nearly $265 billion at the current exchange rate.
Barry Ritholtz, the CEO of Fusion IQ and author of the Big Picture blog says, "The wildcard is how much of an impact does Ben Bernanke have on staving off a recession." Ritholtz sees an increasing possibility of recession in 2013 or 2014.
Ritholtz says central banks, especially the Fed, have been artificially supporting the financial markets with low interest rates. The economic fundamentals are too weak to buttress a stock market rally, he notes. As a result, Ritholtz "suspects" any additional moves by the Fed to revive the economy will be less effective and the market will eventually decline, as it naturally would in a sluggish economy. ... Continue to read.
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