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European Central Bank Replies |
Stephan
Newbie
Joined: 03 Aug 2009
Posts: 5
Location: Bonn; Germany
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 Posted: Mon Aug 03, 2009 9:14 pm Post subject: |
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| Be aware of Pigs: Portugal, Italy, Greece and Spain; stay also away of Ireland. If the US has a problem with real estate Spain and Ireland have at least two problems with it. Just as an example: In Spain there were more buildings built than in France and Germany together: This means 40 Mill. needed more buildings than 140 Mill. you can perhaps imagine the result. Even if you implicate the more advanced tourism. |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16445
Location: Sunny California
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16445
Location: Sunny California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Thu Jul 02, 2009 10:09 am Post subject: |
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Really compelling article on what's really going on within the ECB - specifically what it's doing to support the PIGS economies:
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article6597813.ece
| Quote: | The Fed has “monetised” roughly $1 trillion of US Government debt since 2007, if we combine its Treasury and agency bond buying. Meanwhile, the ECB has lent $1.5 trillion to the euro-area banks. But what have the euroland banks done with this new money? They have lent most of it straight to their governments. Indeed, the governments in Ireland, Greece, Portugal, Spain and Austria would long-since have gone bust had it not been for the willingness of the commercial banks in these struggling economies to buy unlimited quantities of government bonds with money borrowed from the ECB. And these bond purchases have, in turn, been used as collateral for more ECB borrowings, which could be used to buy more government bonds.
In effect, therefore, the ECB has been lending money by the shed-load to governments, with commercial banks acting merely as a fig leaf for what would otherwise be seen as a blatant monetisation of the most insolvent European countries’ public debt. In normal circumstances, this fig leaf might at least have theoretically protected the virginal purity of the ECB by interposing the commercial banks’ own balance sheets between the government borrowers and the ECB.
In normal circumstances, if the Greek Government defaulted, damaging the collateral deposited by Greek banks at the ECB, the losses would fall on the Greek banks, rather than the ECB, since commercial banks remain the beneficial owners of the collateral they deposit. But in today’s conditions, this Maginot Line between the credit problems of European governments and the ECB’s balance sheet is a joke, since the Greek, Irish and Spanish banks queuing up for ECB funding are near-insolvent and would certainly be insolvent were it not for the limitless supply of money they are getting, in exchange for dubious collateral, from the ECB itself. In short, the commercial bank intermediaries interposed between the ECB printing presses and European governments’ borrowings should not even be described as a fig leaf — more like the climactic G-string in the world’s most expensive strip show. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Tue May 12, 2009 9:57 am Post subject: |
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Axel Weber still in denial over the state of European finances and future economic growth:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEeXKEd16xDM&refer=home
The 60 billion Euro program to purchase covered bonds is definitely not enough - unless and until the bad debts in the Euro Zone's banking system are eliminated. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Fri May 08, 2009 1:41 am Post subject: |
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Note that the covered bond purchase is heavily skewed towards helping the German and the French market:
http://www.bloomberg.com/apps/news?pid=20601087&sid=arbowzvQs8CY&refer=home
| Quote: | Trichet’s policy shift, pushed by smaller nations such as Cyprus, Greece, Austria and the Netherlands, is a setback for the conservative Bundesbank, which provided the blueprint for the ECB at its inception in 1998. While Weber downplayed the significance of the asset-purchase program, it will see the ECB taking more risk onto its books against his wishes.
“It’s a blow to his personal credibility,” said David Tinsley, an economist at National Australia Bank in London. “The Rubicon that’s been crossed is that the ECB will be accepting private credit risk on its balance sheet.”
‘A Few Bonds’
Weber said on April 15 that “direct interventions, such as the purchase of corporate debt, shouldn’t take priority.” He pushed instead for the ECB to lengthen the maximum maturities on its loans to banks to 12 months from six months, a measure the central bank also announced today.
“We’re extending the maturities of refinancing operations with banks, that’s the important measure,” Weber said yesterday in an interview with German broadcaster ARD. “In addition we’re buying a few bonds, that’s true.”
Weber had also campaigned for the ECB to set a 1 percent floor for its benchmark interest rate. While the bank yesterday cut the rate by a quarter point to 1 percent and called that “appropriate,” Trichet said it is not necessarily at its lowest level. All of the decisions were “unanimous,” Trichet added.
ECB policy makers have been split over the best policy response to Europe’s deepest recession since World War II. The economy of the 16 euro nations will shrink 4.2 percent this year, according to the International Monetary Fund, more than the projected 2.8 percent contraction in the U.S.
Orphanides, Papademos
Athanasios Orphanides, the former Federal Reserve economist who now heads the Cypriot central bank, led the push for the ECB to engage in asset purchases and keep open the option of deeper rate cuts. The idea gained momentum when ECB Vice President Lucas Papademos floated the idea of buying corporate debt on March 26.
Still, Weber’s resistance to asset purchases, shared by Executive Board members Juergen Stark and Lorenzo Bini Smaghi, left the 22-member Governing Council divided at its April policy meeting. Trichet was forced to delay a decision on new measures until May.
Some economists said the purchase of covered bonds doesn’t represent a heavy defeat for Weber, as Germany has 57 percent of the market. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Thu May 07, 2009 7:26 am Post subject: |
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The ECB capitulates and pledges to buy up to 60 billion Euros in covered bonds. This was definitely not expected among the major central banking analysts:
http://www.bloomberg.com/apps/news?pid=20601087&sid=abQX3ARv881s&refer=home
| Quote: | European Central Bank President Jean- Claude Trichet said the ECB has agreed on a 60 billion-euro ($80 billion) plan to buy covered bonds and that its benchmark interest rate is now appropriate.
“The governing council has decided in principle that the eurosystem will purchase euro-denominated bonds issued in the euro area,” said Trichet at a press conference in Frankfurt. The bank, which today cut its main rate by a quarter point to 1 percent, will extend the maturity of the unlimited loans it gives banks to 12 months.
ECB officials have spent the past months bickering over whether to fight a recession by purchasing assets, with Bundesbank President Axel Weber leading resistance to such a move. The U.S. Federal Reserve, the Bank of England and Bank of Japan have lowered rates close to zero and are already buying bonds, effectively printing money to reflate their economies in a policy known as quantitative easing. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Thu Apr 30, 2009 10:51 am Post subject: |
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The ECB imposes a code of silence on the governing council:
http://www.bloomberg.com/apps/news?pid=20601068&sid=a6.oUwblqzKA&refer=home
| Quote: | “Council members probably realized that they have to discuss measures first among themselves,” said David Milleker, chief economist at Union Investment GmbH in Frankfurt. “They’ve created more confusion than clarity. The entire cacophony didn’t exactly give the picture of a united council in any case.”
Since the ECB’s mid-month meeting on April 23, only Executive Board members Lorenzo Bini Smaghi and Juergen Stark have commented on the specifics of possible new measures. The ECB’s traditional “purdah period” starts today. It requires that officials refrain from commenting on monetary policy in the week before a rate-setting meeting.
The U.S. Federal Reserve, the Bank of Japan and Bank of England have already lowered lending rates to near zero and are buying government and corporate debt to bolster their economies. The Bank of Canada earlier this month cut its main rate to 0.25 percent and said it plans to leave it there for more than a year. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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diesel
Moderator
Joined: 05 Oct 2006
Posts: 793
Location: Australia & New Zealand
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| Posted: Fri Apr 24, 2009 3:49 am Post subject: |
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I just don't see quantitative easing coming out of the ECB. Lets be realistic they have been behind the curve ball for longer than I can remember!
IMO the result will be a dramatic bust which will butcher EU money supply sending the region into a deflationary depression. The result will be a stronger Euro due to the collapse in money supply which could very well subsequently lead to a capital flight out of the US given worries about the weaker dollar (assuming Bens helicopters keep the money supply juiced).
Call it the old worlds revenge. 
_________________
All cats are gray in the dark. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Thu Apr 23, 2009 10:19 pm Post subject: |
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German economic think tanks applying the pressure on the ECB to adopt a quantitative easing policy:
http://www.guardian.co.uk/business/feedarticle/8469579
This is exactly what we need to avoid a dramatic bust in both Eastern and Western Europe. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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