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What Thursday's European Central Bank Meeting Means for Investors

NEW YORK (TheStreet) -- Three months ago, Mario Draghi, president of the European Central Bank, set the bank on a path to lower the value of the euro. At the time, the market value of the euro was about $1.36.

The concern at that time was about the continuing disinflation of the eurozone and the possibility that the European continent was heading for a recession.

The value of the euro has dropped since then, just breaking $1.32 around Aug. 20.

The reason for this decline: Italy was declared in a recession after the 2014 second quarter GDP numbers were announced. German growth for the first half of the year was flat. And the French economy was doing so badly that French president Francois Hollande had to re-structure his government to try to reform his country's economy.

Now, the spotlight is back on Draghi and the ECB, which has a policy meeting this Thursday.

The question is -- given all the bad news that has been reported over the past month -- what will Draghi and the ECB do to combat the looming eurozone recession and a possible Japan-like stagnation?

The first thing to come into anyone's mind these days is for Draghi to emulate the Federal Reserve system in the U.S. and move to a policy of quantitative easing.

Draghi has seemed reluctant to make such a move.

Although Draghi has stated in the past that he would do whatever was necessary to spur on the economies of Europe and keep the currency union together, he has dragged his feet concerning the move to quantitative easing.

For one thing, as Draghi looks toward America, he sees that in terms of boosting on economic growth, quantitative easing has done practically nothing.

If anything, quantitative easing has provided support for the banking system and helped the regulators to eliminate troubled banks and reduce the size of the banking system in an orderly fashion. This effort has gone amazingly well.

But quantitative easing has also helped to propel the American stock market upwards and keep the lid on longer-term interest rates. The Standard & Poor's 500 (SPY) stock index has penetrated the 2,000 ceiling for an all-time high, and the yield on the 10-year U.S. Treasury note, which was expected to run up above 3.00% this year, now rests around 2.35%.

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