The big news of the day came around 8:30 AM, when ECB chief Jean-Claude Trichet hinted he might soon raise rates to deal with inflation.
Obviously surging Brent Crude is freaking him out.
But the world should be freaked out if history repeats. The last time ECB hiked rates was on July 3, 2008, right at the oil peak, but after global markets had already sliding in that fateful year.
It was a foolish move — tightening money to combat oil prices, when the financial system was showing strain. This time it’s European sovereigns showing strain. Is he repeating his error again?