Archive - Apr 24, 2012 - Story

Here is the point; Bernanke thinks he can deal with this falling growth outlook and a deleveraging consumer by adding to QE to keep rates very low. I am not sure it will work and if it doesn’t yields could start to rise and the more he throws at it the more yields actually rise as vigilantes will fear pent up inflationary pressures. This is a potential disaster for central bankers and at some point the impact of QE may be proven limited. When it is the central banks will have shot the last bullet. Why is no one discussing this?

If there is anyone shocked by today's announcement by the Bank of Greece that the country is once again slashing its full year economic forecast by 10%, aside from the IMF of course, please raise your hand. As a reminder, the IMF, whose projections were the basis for the recently released second bailout, and which assume a flat GDP in 2013, somehow has visibility through 2020. Which is more than can be said for the Bank of Greece: its latest forecast of 4.5% GDP decline was made three weeks ago. THREE WEEKS. And it already is being revised. In other news, we look forward to updating the deposit flight out of Greek banks when the most recent monthly update is released shortly, confirming that the local economy continues to be, simply said, dead. A few more such comparable downward revisions, and the Third Greek bailout (Of European Banks), which is due any second now, may be jeopardized (as it will be more difficult to sell to Germans why they are once again bailing out French banks).

Following yesterday's disastrous European economic data which basically missed everything, it was time for a Spanish Bill auction to fix everything, same as always (if only this time there was no surge in some German confidence index). Below is a recap of all of today's ECB cash recycling operations, aka auctions, which have given the overnight futures an uplifted. Still, we wonder why: the yields on all were higher across the board, which in turn means that sovereign funding is getting increasingly unsustainable.