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"devastating effects on exporters, much worse than anything we have seen so far"

From a European perspective, there is an acute danger of an extreme exchange-rate overshoot, which on top of the fall in global demand for European export goods could have devastating effects on exporters, much worse than anything we have seen so far.
Unlike 10 years ago, there is not much scope for wage cuts this time, so this crisis will hit profits.
Wolfgang Münchau, Financial Times, December 21 2008

The dramatic appreciation in the euro over the last couple of weeks constitutes a significant amount of policy tightening, which offsets almost all of the recent interest rate cuts. The US has shifted to a policy to generate inflation in the long run and I suspect the Fed will succeed. The Fed will probably be in no hurry to reverse the policy, so inflation will be allowed to build up in the US – and this will weaken the dollar further, to put it mildly

The pressure on the ECB to go down to zero per cent will become immense just for that single reason.

The German economics ministry is now forecasting a growth rate of minus 3 per cent for 2009. The speed with which forecasts have been revised downward is breathtaking. While the ECB does not target economic growth, it cannot ignore such a rapid deterioration

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