European Central Bank Considers Negative Interest Rates

This morning’s key headlines from GenerationalDynamics.com

• Hezbollah leader Nasrallah says he will defend Syria’s Assad militarily
• Turkey’s Erdogan will pressure Obama to intervene militarily in Syria
• European Central Bank considers negative interest rates

Hezbollah leader Nasrallah says he will defend Syria’s Assad militarily

People watch Nasrallah on television on Tuesday (Daily Star)

Syrian opposition leaders are denouncing the “threats” by Sayyed HasanNasrallah, the leader of Lebanon’s Iran-backed Shia terrorist groupHezbollah. Nasrallah declared on television on Tuesday that Hezbollahwas already active militarily in Syria, and that Hezbollah andpossibly Iran would intervene further if necessary to prevent thedownfall of Syria’s president Bashar al-Assad. According toNasrallah:

“Syria has real friends in the region and the worldthat will not let Syria fall in the hands of America, Israel orTakfiri [Salafist Sunni] groups. They will not let this happen.

We tell you that you [rebels] are unable to topple the regimethrough military means. After two years and based on facts on thefield … you have no ability to do so. This is the case when youare now only fighting the Syrian army and the popular forces loyalto the [government]. Up to this moment there are no Iranian forcesin Syria.

What if dangerous developments occur, forcing states or resistancegroups to step in the field in Syria? Whoever wants to save Syria… feels sad for the daily bloodshed in Syria … and does notwant the Palestinian cause to be lost … should push for dialogueand a political compromise.”

The remarks were denounced by the Syrian National Council (SNC)leaders, who said that they had “hoped” that Nasrallah would actmore responsibly, but they “have heard nothing but threats.”Daily Star (Beirut) and Al Arabiya (Dubai)

Turkey’s Erdogan will pressure Obama to intervene militarily in Syria

During an upcoming visit by Turkey’s prime ministerRecep Tayyip Erdogan to Washington, Erdogan will tell Obamathat “it is clear” that the al-Assad regime is using chemicalweapons. He said on Thursday:

“We will discuss the issue of chemical weapons with USPresident Barack Obama during my visit to the US. It is clear that[chemical weapons] are being used by Assad’s regime. Theopposition outmatches the regime on the ground, but the regimeuses chemical weapons, war planes and helicopters. Air is the onlyfield in which the regime is ahead of theopposition.”

This is Turkey’s first official confirmation that Syria has usedchemical weapons, and Erdogan is pressing for Western militaryintervention in Syria. Zaman (Istanbul) and Hurriyet (Ankara)

European Central Bank considers negative interest rates

With the new bad economic data coming out of Europe almost on a dailybasis, the European Central Bank (ECB) president Mario Draghiannounced a lower interest rate of 0.5%, the lowest in its history.

Draghi had resisted lowering the interest rate because of fear ofinflation. But the inflation rate in the eurozone has fallen sharplyin the eurozone during the past month, so Draghi felt that a lowerinterest rate was justified. It’s worth pausing a moment here topoint out again that for the last ten years I’ve been predicting aglobal deflationary spiral during this generational Crisis era, whilemainstream economists and various politicians and pundits have beenpredicting high or hyper inflation, and that they’ve been consistentlywrong ahd I’ve been consistently right.

The second reason that Draghi has resisted lower the interest ratewas because there was no reason to believe it would do any good.The ECB has pumped trillions of dollars into the banking system,allowing eurozone member nations to go even more deeply into debtat cheap rates, and artificially boosting stock prices as all thatliquidity pours into the stock market. But none of the moneyis being loaned to individuals or businesses, so the overalleconomy is not being helped (which is what Generational Dynamicshas been predicting).

So now Draghi wants to try something else: Make interest ratesnegative for money that individual banks deposit with the central bank(the ECB). That deposit rate has been zero for a while, but nowDraghi is considering charging money to banks that want to depositmoney in the ECB. The reasoning is that if an individual bank can’tdeposit its extra cash in the ECB, then it might loan it out toprivate individuals or businesses (which Generational Dynamics sayswon’t happen). A negative interest rate is a sign of an acceleratingdeflationary spiral, since it means that cash is actually becomingmore valuable with time, rather than increasingly worthless, as theinflation pundits have been claiming. Bloomberg

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