Besides the stress tests, the other talk of the day is the op-ed in the FT from ECB leader Jean-Claude Trichet calling for the whole world to adopt austerity.
There aren’t any huge surprises in his reasoning (stability, the benefit of having seen what happened during the recent crisis, etc.).
The more interesting dynamic is how it positions him differently than Bernanke, who is not calling for austerity now, but who is instead calling for continued stimulus now, and austerity later.
Is Trichet’s call for less spending a positive for the euro? Maybe, but if government’s in Europe retrench, it will place more pressure on the ECB to be stimulative, a potentially countervailing force.