As expected, the Bank of England left rates unchanged at 0.5% and the European Central Bank left rates unchanged at 1.0%.
The BOE also signaled that they would not be expanding their QE program, but left open the option to buy more down the road should conditions change. We're awaiting ECB's Trichet to comment on Greece and the rest of the PIIGS to see if more will be done to assist them. Two of Greece's largest unions are setting strike dates for February 10th and February 24th to protest the austerity proposals proposed by the government.
Of course, Greece is not the only country with major fiscal problems.
Portugal, Spain, Italy, and Ireland are all seeing their sovereign CDS prices shift out significantly with Portugal now at the level Greece was at during December. This is the first true test of the Maastricht marriage for all of the Euro zone members and highlights the major problem with the construct: it's not a true union.
Case in point, it seems the IMF is the only body that may have the legal capability to assist these countries in their time of need. This reminds me of something, what is it?
I'm thinking of what happened between the shotgun marriage of Bear Stearns to JPM and the failure of Lehman. Nothing. Nothing happened for 6 months even though US authorities knew they could potentially see another major problem. This is what I think could be happening in the Euro Zone and with the European Union. The ECB and EU know they have a problem with some of their members not meeting the 3% debt to GDP metric and yet there doesn't seem to be any action to legally assist these countries or have the legal authority to create something like a TARP.
This is the test many have predicted that would eventually come for this quasi-union. Given the sloth-like movement of the EU parliament, it may take a true crisis for them to create what is needed to avoid this in the future.
The clock is ticking on the EU/ECB and they're wasting time.
Andrew B. BuschDirector, Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and reach him hereand you can follow him on Twitter at http://twitter.com/abusch.