Synchronised easing

Image from this rather charming site

Too late for May 1st, but I suppose better late than never, on Friday,  three Central Banks either cut rates or announced that they were adding more liquidity to the system.  China cut rates 31 basis points (0.31 per cent -- why such an odd number, nu?), the Bank of England promised to add more QE (quantitative easing) in the amount of £50 billion, and the ECB (what took them so long?) cut 25 basis points off its discount rate, and reduced the rate banks get on their deposits with the ECB to 0.  Cutting the rate on deposits at the ECB is designed to make all alternative avenues for surplus cash attractive, which is at least a step in the right direction, though when German short-dated bonds already yield zero, it's obviously directed at the soft underbelly of Europe banks (the PIIGS -  Portugal, Ireland, Italy, Greece, Spain)  In reality, the ECB discount rate should be also be zero, because if you want to avoid a debt deflation you must make cash costless and push so much liquidity into the system it's awash with it.  But (sigh) this is at least an acknowledgement that something is wrong.  Together with the shuffling steps from last week's summit to create a central euro bank rescue mechanism, this will help.  A little.  More to the point, though, would be an end to the senseless masochistic drive for austerity.  I'll write more about that later, but since it's a beaut winter's day here in southern Oz, and it's Sunday, you'll have to be patient.