Central banks met in Jackson Hole, Wyoming (US) did not make any firm decisions about interest rate increases when they met on Friday. Janet Yellen, the Chairman of the US Federal Reserve, seemed less enthusiastic about raising rates, and Mark Carney, the leader of England's central bank showed the same thoughts even though the Brits are in the best shape to raise rates right now.
Not everyone at the Fed agrees with Yellen. Some voices warn that a new financial market bubble could swell if the Fed does not stop its stimulus spending in October. What is slowing them down? Surely, there are doubts about the real health of the US economy. Erratic behavior over the past several years is inconsistent with forecasts, and this behavior gives Yellen pause. Other central bankers agree. Growth has eased unemployment, but the labor market is still struggling and Yellen will not raise rates until she has a clearer view of what is going on with the job market.
Also worrisome, debt across the world is increasing at explosive levels. In Spain, this is obvious, and we know that heavy debt will hamper our chances for real recovery. Even though it is somewhat taboo to talk about, central bankers should discuss structured loan forgiveness and bankruptcies in order to make the debt more manageable.
