ECB actions similar to the Fed’s in 2008

Heidi Moore Dec 1, 2011

Mitchell Hartman: Europe’s markets have been mixed today, thanks in large part to the raging debt crisis there.

Marketplace’s New York bureau chief Heidi Moore is here to discuss the ongoing effort to get the euro back on an even keel. Good morning, Heidi.

Heidi Moore: Good morning.

Hartman: So, what does this bailout say to you — that governments are on top of the crisis or are they playing catch-up?

Moore: Yeah, they’re playing catch-up, and they have been since 2008, right? So Mario Draghi, the head of the European Central Bank, said that the ECB has tried almost everything possible, and he admitted it’s had almost no impact. And it felt a lot like this in the U.S. in 2008.

Hartman: Right. And people continue to make parallels between this debt crisis and the mortgage meltdown of 2008.

Moore: And that’s a pretty good parallel. The last time that European banks found it this hard to get money was way back in January 2008. Now that was really almost at the beginning of the sub-prime crisis of the economy. And if you think about what happened back then, a lot of what the Fed did, and what the treasury did, is bend rules. They had to create new rules on the fly — and the European Central Bank is doing that exact same thing now to come up with new bailouts.

So I talked to Lorcan Roche Kelly. He’s the chief European strategist at Macrolytics.

Lorcan Roche Kelly:There’s all these strange things that are happening there that two years ago, I would have said “No, that can’t happen. No, that’s illegal, no, that’s against the treaty.” But the ECB still does it. And the reason they do it is because they will do everything they can when they come to the edge of the cliff to save the currency.

Now that sounds like the Fed and the Treasury back in 2008. Remember TARP?

Hartman: I do remember TARP. Marketplace’s New York bureau chief Heidi Moore. Thanks.

Moore: Thank you.

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