Joblessness Spurs Trans-Atlantic Divide on Policy
Author: Brian Blackstone</br></br>Policy makers at the European Central Bank face the same high unemployment and slow growth that dogs their friends across the Atlantic at the Federal Reserve. But don't expect the ECB to follow the Fed in taking extraordinary measures to try to get things moving again.</br></br>The Fed thinks it can and should use the tools at its disposal, in this case buying U.S. Treasury bonds to bring down long-term interest rates and goose growth, because doing so will bring down the jobless rate.</br></br>The Europeans won't have any of it. They view their unemployment problem as more structural, the result of rigid labor rules that discourage hiring of workers who won't move to the places where jobs exist or shortages of workers with skills employers demand.</br></br>To the Fed, by contrast, the problem at least in the U.S. is seen as more likely a collapse in demand. If that is true and if the Fed can reignite growth, it will mean a quick drop in unemployment.