Cutting Interest Rates Again Won't Dig Europe Out of Recession

The European Central Bank shaved its benchmark interest rate from 0.75 to 0.5 in a move that signifies a lot of nothing. As the euro zone's economic recession deepens, the central bank's rate cut will do little if anything to improve Europe's sputtering economies.

This bit of blarney, as reported by International Business Times:

"The ECB should focus on stimulating demand in the euro area's core," wrote Daiwa Capital Markets. "This is why an interest rate cut makes sense.

But the Old Gray Transgender (diversity, baby!) reports in its lead about the rate cut:

The European Central Bank cut its benchmark interest rate to a record low Thursday, a mostly symbolic move that could lift morale in the euro zone but is unlikely to jolt the Continent out of recession.

"Mostly symbolic" wins the Kewpie doll. With the central bank's benchmark rate already at an historic low, whittling a little more off the rate ain't gonna amount to a hill of stale baguettes.

Europe's elites are so invested in the statist monstrosity they've created that they'd rather tinker while Rome, Athens, Lisbon, and Madrid melt down... followed by the rest of Europe, with the possible exception of Germany, but that's not a given.

European nations need to throw off the smothering wet blanket that Brussels and the euro have become. The order of the day is independence and reform: fundamental reform of taxes, the welfare state, and business regulations, nation by nation. Tough work, but its gotta be done, lest Europe spiral into a deeper mess extending indefinitely.

The E.U. -- a corporatist construct -- is the product of an ideological dead end, like fascism, socialism, and communism. Maybe Europe's big brains should go green in their thinking by recycling monarchy, give it another whack; it had more success over a longer time.

Yet more candor from the O.G.T.:

Many banks in Europe, whose shyness to lend the E.C.B. is trying to address, may regard the cut with mixed feelings. While the new rate will lower the cost of raising money, the cut may also reduce the profit margin on mortgages or other forms of lending. Many banks in Europe are barely profitable and can ill afford any more problems.

And this:

The bank left the rate it charges banks to park money at the E.C.B., the deposit rate, at zero. There has been speculation in the past that the E.C.B. would cut the deposit rate below zero, charging banks to park their money, in order to discourage lenders from hoarding cash rather than issuing loans. But there was fear that move could have unintended consequences.

"Unintended consequences." Europeans are champions of unintended consequences. Remember those entangling alliances that led to World War I? Remember the 20th Century?

Liberty, capitalism, and limited government aren't on Europeans' agenda. Just more of the same financially, or worse. So get ready for unintended consequences, coming to charming little sidewalk bistros across old Europe sooner than anyone may think.