Rhody Trader

Several folks have commented in recent days that the governments, central banks, and the like around the world have been going at this financial crisis piecemeal rather than addressing it in a unified fashion. The criticism they are leveling is perhaps a bit harsh in general given that in some cases it has clearly been a case where action was needed very quickly to put out a specific fire – like banks going under.

That said, all of these numerous and various efforts taken around the globe do give the impression of a lot of panic action. For example, the move by Ireland to guarantee deposits created a capital drain from other Eurozone countries where there weren’t guarantees in to Eire. That worsened things in the big picture rather than improved them. In other words, those officials were just reacting without really considering (either that or they were intentionally taking advantage of other EZ members, which has other implications). The idea was perhaps a good one, but more consideration and coordination was required.

When someone, or some institution, is in reaction mode it generally means less than optimal decision-making. Now that the leaders are getting together, maybe we’ll see some more considered action.

 

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