On The ECB's Announcement Of The 3 Month LTRO

Everyone's favorite Chiswick denizen, Goldman's Erik Nielsen, provides a concise summary of the just concluded ECB press conference: the take home is that any fears of an ECB exit can now be shelved away indefinitely. "The only important news was the announcement of three 3-months fixed rate full allotment LTROs on July 28, August 25, and September 29.  This is positive news because it de facto delays the otherwise announced exit strategy, and it was good to hear that this decision had been taken unanimously." How any of this is EUR positive, we expect to understand from Goldman's imminent re-upgrade of the EURUSD to 1.35.

The ECB has just ended its press conference.    In summary, it was a boring as expected , but it was good to see Trichet return to his usual good and comfortable spirit. 
 
The only important news was the announcement of three 3-months fixed rate full allotment LTROs on July 28, August 25, and September 29.  This is positive news because it de facto delays the otherwise announced exit strategy, and it was good to hear that this decision had been taken unanimously.  Apart from this announcement, they revised up a tad their 2010 GDP and inflation forecasts, and lowered their 2011 GDP a bit, but nothing of a magnitude that would have any impact on their thinking in terms of policies.  As expected, Trichet refrained from providing any additional information or colour on their asset purchases, de facto leaving all his doors open - and he declined several invitations to comment on the weaker euro apart from saying that it is a credible currency.  It sounded as if he was pretty comfortable with both.

Comments

[Zeroexperience2010]

The highest court in Germany, the Bundesverfassungsgericht, has just refused to consider under an express procedure whether the European bailout is legal under the german Verfassung.

This doesn't exclude a 'normal speed' procedure, but might also have contributed to a rise in the EUR.

[Ragnarok]

Elites gone wild! Link?

[barthezz]

Um auf nationaler Ebene die Voraussetzungen für die Leistung
finanziellen Beistands über die Zweckgesellschaft (EFSF) zu schaffen,
verabschiedete der Deutsche Bundestag am 21. Mai 2010 das angegriffene
Gesetz zur Übernahme von Gewährleistungen im Rahmen eines europäischen
Stabilisierungsmechanismus (im Folgenden:
Euro-Stabilisierungsmechanismus-Gesetz, BGBl I S. 627), das vom
Bundesrat noch am gleichen Tag gebilligt und am 22. Mai 2010 verkündet
wurde.

Nach Billigung des Euro-Stabilisierungsmechanismus-Gesetzes durch den
Bundesrat hat der Beschwerdeführer am 21. Mai 2010 Verfassungsbeschwerde
wegen Verletzung seiner Grundrechte aus Art. 38 Abs. 1, Art. 14 Abs. 1
und Art. 2 Abs. 1 GG erhoben und den Erlass einer einstweiligen
Anordnung beantragt.

Der Zweite Senat des Bundesverfassungsgerichts hat den Antrag des
Beschwerdeführers auf Erlass der begehrten Anordnung abgelehnt. Die für
den Erlass einer einstweiligen Anordnung erforderliche Folgenabwägung
ergibt, dass der Allgemeinheit schwere Nachteile drohen würden, wenn die
einstweilige Anordnung ergehe und sich die Gewährleistungsermächtigung
später als verfassungsrechtlich zulässig erweise.

http://www.bundesverfassungsgericht.de/pressemitteilungen/bvg10-038.html

[barthezz]

At national level, the conditions for the performance
financial assistance through the special purpose vehicle (EFSF to create),
the German Bundestag passed on 21 May 2010 attacked
Law on the Acquisition of warranties in a European
Stabilization mechanism ("the
Euro-stabilization mechanism Act, Federal Law Gazette I, p. 627), which is
Federal Council approved the same day and on 22 May 2010 announced
was.

After approval of the €-stabilization mechanism by the Act
Federal Council, the complainant on 21 May 2010 constitutional
for violation of his fundamental rights under Article 38, Section 1, Article 14 paragraph 1
collected and article 2 paragraph 1 GG and the adoption of interim
Arrangement requested.

The Second Division of the Federal Constitutional Court rejected the application of
Complainant refused to grant the order sought. For
the adoption of interim measures necessary consequence assessment
shows that the public would be seriously affected if the
interlocutory orders shall be issued and the warranty authorization
later prove to a constitutional procedure.

[Ragnarok]

Shut up, your rights don't matter, we know what's best for you....

[bugs_]

Bring out yer exit strategy!  Bring out yer exit strategy!

[Conrad Murray]

Euro: I don't want to go on the cart.  I feel fine.

[Caviar Emptor]

Yup. ECB trying to act like yer grandpappy: we'll foot the bill for all of your bad debts, don't worry. Short term side effects: double whammy on! As actual assets continue to deflate, the paper backing those assets is being snapped up with newly minted liquidity, causing inflationary pressures throughout the economy. Long term side effects: EU one step closer to monetary collapse, dragging under all the other survivors of the Titanic.

[Josephine29]

I like the way that Erik Nielsen feels that delaying "the exit strategy" is good news! It sounds like he does not have a lot of faith in the recovery either.... But thats not quite what he says usually is it?