Reactive and Proactive

Yesterday ECB decided to keep interest rates unchanged, even though they know there is a problem with Greece and Spain's balance sheets. Today Fed's chairman Bernanke shows reluctance to provide more momentary stimulus to the US economy based on the fact that it has not deteriorated. However the Chinese overnight came in and lower their interest rates by 25 basis points to 6.31 at a time where the global economies are very fragile. The Chinese taking action before the first world economies? Say it ain't so.

There has to be something within China's numbers that has made their government concern and willing to take action, but everyone knows Europe is in trouble and America's economic growth has slowed than why not the US and Europe take action?

What I do not get is that ECB and the Fed know that the economy at present time is not better off than where it was last year and they are still reluctant to take any course of action to do anything. The mentality of wait and see before taking any actions is exactly how America got itself into trouble in 2008. Bernanke ignored the warning signs then and when it was too late the Fed had to take dramatic steps to saving the US economy.

Since 2008 it has been the extra spending provided my the world's governments that has held the global economy from the brink of collapse. The only reason why stocks go up this pass few days is the hope for more stimulus to support the economy. No action taken at the moment will only led to devastating consequences later.

If inflation is a fear for the governments then consider which is better; deflation? Stop reacting to the situation and start being proactive.