Strong action by the world's stewards of monetary policy was necessary -- for now. Hardly anyone believes that the central banks' actions are more than
scotch tape over a shattered EU.
Central bankers around the world are very, very worried about Europe, and they're starting to do something about it. This is equal parts terrifying and encouraging.
That's the critical takeaway from the liquidity injection - a fancy way of saying, turning up the spigot on global lending - embarked upon on Wednesday by the Federal Reserve, the European Central Bank, and four other central banks from around the globe. The coordinated effort will make it cheaper for foreign banks to borrow U.S. dollars from their central banks, which is important, because those banks have found it increasingly expensive to borrow dollars elsewhere to maintain cash flows.
The substance of the announcement, though, is far less important than the symbolism. Don't be fooled by Wednesday's early stock-market rally: Hardly anyone believes that the central banks' actions are anything but scotch tape over the shattered window of the European economy.