“I plan to sell/short this news for several basic reasons,” writes Doug Kass, President of Seabreeze Partners.In a new note published on The Street, Kass writes that he’s not very impressed by Mario Draghi’s announcement that the ECB would begin unlimited bond-buying program.
“Not only is Europe slipping more rapidly into a deeper recession but the implementation of serious and effective longer-term policy responses remains unlikely. Band-Aid policy measures of providing liquidity (which aids the transmission of monetary policy) remain the operative palliative, and they will likely continue for some time to come.”
And he argues that the U.S. serves as a pretty good model for what’s to come:
“…we can look at the massive doses of monetary stimulation in the U.S. as a template. Despite unprecedented easing, we are now more than three years after the Great Recession of 2008-2009, and the domestic economic economy is growing (in real terms) at only 1.8%. Given the more dire state of the eurozone (accelerating inflation, decelerating economic growth and rising unemployment), how will it be possible for Europe to grow out of its debt problem? The answer is that it won’t be able to without the heavy lifting and unpopular policies that could encourage growth by cutting expenditures and balancing trade.”
Bottom line, he says: “There will be many more Thursdays with Mario.”
Read the whole post at TheStreet.com.
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