February 4, 2011
Jean-Claude Trichet is doing a fair imitation of a pretzel. The European Central Bank's president is having to tie himself in knots to square euro-zone monetary policy.
On the one hand, the German economy is belting along. Throw in rising global commodity prices and there's a serious risk of an ugly inflationary cycle kicking off in Europe's biggest economy.
On the other, crisis-crippled countries at the periphery are barely managing to stay afloat. The ECB is having to make sure they have enough liquidity to keep their banking sectors from foundering and low enough interest rates to keep the countries from falling into a cycle where deflation makes the existing debt burden ever harder to eliminate.
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