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Two meetings, three crises

Published Thursday, September 4th, 2014

Two meetings today to deal with three crises. Nato meets in Wales for what has been described as its most important meeting for decades with two key items on its agenda: what to do about President Putin’s expansionism and what to do about the Islamic State. The ECB meets in Frankfurt to decide what to do to rescue the eurozone economy.

The markets reacted positively to reports of a ceasefire agreement between Presidents Poroschenko and Putin which were then denied by Russia as it is not party to the conflict! Clearly there was a discussion and clearly Putin laid out his ideas on what will work. That is a long way from being the “peace plan” that was so widely headlined. It has the look of more a distraction just before Nato meet than a plan with substance unless Ukraine gives up and hands southern and eastern Ukraine autonomy.

The fact that today’s ECB meeting is seen as so important reflects how little progress the eurozone is making on the road to economic recovery. Yesterday the FTSE 100 reached its highest level in 14 years in a demonstration that booming stock markets do not depend on economic growth. They feed on easy money, low interest rates and corporate performance. Investors expect more of the first two from the ECB today, or promises thereof. Not until poor growth hits corporate top and bottom lines are we likely to see a major pullback, unless a shock intervenes first.

to read the rest of the report, please click here 

Posted by David Hufton