The contrast between the Federal Reserve's (Fed) statement on Wednesday and the European Central Bank's (ECB) press conference today shows how the Fed imposes its credibility on the markets, whereas the ECB is earning it.

The Fed will look for "low rates of resource utilization, subdued inflation trends and stable inflation expectations" to keep interest rates low. Resource utilization is likely to remain low, so that's not a factor. Secondly, inflation trends will quite likely inch upwards as year-on-year comparisons will be tougher. That leaves the last point: inflation expectations. The Fed has to contain inflation expectations, but the Fed ultimately controls inflation expectations. The best way to control inflation expectations is through sound monetary policy. What the Fed is doing instead is to see whether it can get away with ultra-loose monetary policy without causing inflationary expectations to be dislodged. Differently said, the Fed will tighten only if the credibility in the Fed erodes as that would be the reason for inflationary expectations to rise. In the best of cases, this is a very risky strategy; it may be a precursor for a rather volatile, if not inflationary monetary environment...

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Global systemic crisis – States faced with three brutal options in 2010: inflation, high taxation or default
In the absence of major reappraisal of the international monetary order, the world is now entering the phase of geopolitical dislocation of the global systemic crisis. In 2010, as protectionism and the economic and social depression will gain momentum, a large number of States will be compelled to choose between three brutal options: inflation, high taxation or defaulting on their debt... (page 2)
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The end of the consumer-as-we-knew-him in the past thirty years
For sure the American consumer, incarnation of the American Dream since Henry Ford, has died. But the Western consumer (outside the US) as we knew him in the past thirty years is also wearing out. In addition to that, LEAP/E2020 believes that it is wrong to think that Asians and Latin-Americans will replace these « consuming machines » and enable « planet-profit » to go on as it used to do… (page 6)
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Crisis exit: In collision with reality – Real state of things at the end of 2009: USA, Euroland, China
The United States, United Kingdom, or even Japan, striving to escape from defaulting, or France and Germany left with no other choice than raise taxes by the end of 2010, in any event, in 2010, as inflation will affect necessity goods and speculative assets, anti-crisis policies and the reality of the global systemic crisis will collide… (page 11)
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Turkey’s awakening: Its gradual exit from the Western camp
Taking advantage of the ongoing systemic crisis, and of the weakening of the US and of the Western superstructure over which the latter’s might is based, Turkey has entered a process of fundamental redefinition of its key geopolitical interests. The new priorities ready to break out by 2012 will account for Ankara’s most profound reappraisal since the country joined NATO in 1952… (page 16)
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Strategic and operational recommendations
. Currencies/Gold: Trends are being confirmed
. Real estate: Renting or buying? A choice requiring careful consideration
. Shares/Bonds: The tipping point is approaching
. « Liquidity surplus »: An iconoclastic explanation (page 20)
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The GlobalEurometre - Results & Analyses
The unanimity of respondents (99 percent) sees no sign of economic improvement in their country… (page 22)
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