ECB Has Reasons to Ease; Fed Has None

But right now we only have Twist2. I think it's clear at least some FOMC members have learned the lesson from post-QE2 commodity inflation scare (2.5% inflation expectation is the trigger for Fed easing, or at least close to it). Fed needs a very good reason to do a full-scale QE. At this point it has none.

Unless filtered with a heavy bias of wishful thinking, Bernanke's recent testimony at Congress clearly shows a balanced view on Fed action. And the notion of Fed easing in advance of eurozone crisis crosses into the territory of delusion.

Fed is not in the business of crisis prediction; there is just too much political risk for them to do anything until at least the danger is clear and present for all to see. It's Politics 101, really: if you prevent a crisis from happening, who's gonna thank you for it?

Speaking of the eurozone crisis, the ECB has every reason to ease at its meeting Thursday. The economy is falling apart everywhere there, including the mighty Germany. And the Austrian-German philosophical opposition to easing is somewhat of a mirage at this point, I suspect.

The haggling is more about influence, mostly between France and Germany, in the future banking supervisory entity or whatever entity they may fancy. And they surely realize they have to save the economy before having a chance to save the euro.

There is a bit of game theory play, however. Since FOMC is to finish first, if Fed does ease, then it'd take some pressure off ECB to ease. Conversely, if Fed doesn't, the pressure on ECB would be higher. Fed's decision today has direct implications on ECB Thursday.

Since risk assets had a significant run last week, lack of significant action by the Fed today would likely bring them down -- stocks (a represented by the S&P 500 Index(SPY) ), gold (GLD) , maybe even oil (USO).

The U.S. dollar (UUP) and Treasuries(TLT) would rebound.

Thursday will be dominated by the ECB decision, meaning euro (FXE) weakness, and the nuances in FOMC language. Since talk is cheap, I expect them to recognize the continued softness in U.S. employment and the risk of contagion from softening worldwide economy.

Some symbolic gesture, such as extending the projection of low interest policy is likely. But this language parsing game is way over my head; I can only try to ignore and look beyond it.

At the time of publication, the author was long UUP and U.S. Treasury bonds.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.