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Europe's Fragmentation Offers Little Hope For Rate Cut "Real" Gains
Earlier in the week we discussed the dismal downward spiral that bank lending was implying for the euro-zone. Today, we get further confirmation that the credit creation business in Europe, the very life-blood of the pump-at-all-costs Keynesian economic world in which our super-inflated debt economies now live, is dead in the water. Not only did M3 come out well below expectations at 2.6% YoY (vs 3% Exp.) but loans to the private sector remain drastically in the red.
The fragmentation across the individual nations is dramatic, indicating that even if Draghi were to cut rates next week it will be largely ineffective - given overnight rates are already close to zero and demand appears absolutely non-existent (due to balance sheet destruction).
Of course, that is the entire point of the central bank, to lower the cost of funding to a point where it's impossible to refuse (force feed supply) but with the LTRO repayments an explicit tightening, banks delevering, and collateralizable assets in very short supply, Draghi will have to look long and hard to find the right "extraordinary measure" to solve this vicious spiral.
Of course he has discussed the direct-to-SME loan program but with demand languid, collateral quality non-existent and the risks implicit in taking that dross on to the ECB balance sheet, we suspect there will be a lot of push back.
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Thank you for that information.
And this concludes our market corrective activity for the day. Time to break out to fresh highs next week, otherwise what are we paying for, bitchez?
Just when exactly are the Europeans going to decide to give this idiotic thing up? When exactly are they going to wake up?
Europeans are waking up ... it is only some months now till the Euro-zone fragments for good and countries start leaving the currency
In Greece there is a new political party, the 'Plan B Party' centred on the issue of leaving the euro ... It is an alliance of leftists and business people, business owners in Greece like in Cyprus seeing no hope unless they leave the euro, but the leadership is from the hard-left, led by a wealthy Communist, Alekos Alavanos
This is splitting the formerly #1 political party in Greece, Syriza, whose leader Alexis Tspiras made the dumb mistake of saying Greeks should stick with the euro 'because opinion polls say Greeks want to keep the euro'. - Of course common people do not realise the euro is what is destroying them, but the business owners have figured it out and other people are waking up. Leaving the euro is an issue that needs leadership, and it looks like the Plan B Party is doing that for Greece.
With the anti-euro 'Alternative for Germany' party gaining strength there, maybe it's not long before the gigantic euro-zone break up.
John Ward's article on Alvanos and Greece's 'Plan B' party -
http://hat4uk.wordpress.com/2013/04/25/euroblown-as-the-clubmed-rebellio...
I really, really hope that they can break from the Euro but I'm skeptical.
Unless they are totally different from the sheeple in the US, they wont care enough ultimately to do it.
Prove me wrong, please....
I'll take Sudden Debt and raise you Sudden Devaluation for 200 Alex." beep beep beep..."and the question is....
A possible Eurozone breakup was in the air long before Mr Ward posted about it yesterday on his troll-infested soap-box.
Recall he also predicted a Grexit on 21/Mar/2012. It never happened. He also predicted Germany would be the first country to leave the EZ. It hasn't happened.
Does he have a clue how much political capital the EU elites have invested in the EZ (and by extension, the EU itself). Whole careers laced with power and self aggrandisement rest on it surviving and becoming the United States of Europe, which Mr Tony Blair hopes to become the first unelected President !! These people will happily wipe out the EU middle classes and wreck the economies and societies of member states before they concede defeat of this maniacal project. Nobody in the EU/EZ wnants to go down in history as the person who brought the utopian fascist dream to an end.
Like I said the other day to you, I wouldn't recommend Ward's phony analysis on anything. At best it is naieve, at worst it is radical-Left agenda-driven. But I can understand that you are possibly one of his super-secret sources that feed him riveting inside information. Right?
Gosh :-)
NB: The only place to get real analysis and informed comments is Zerohedge and some of the blogs listed over on the left.
I imagine they'll wake up at precisely the same point that the US does. When there's no food in the fridge and no Bennybux to get more.
Pray, and delay is not working too well.
Euro Collapse Explained in 3 Minutes
old, but very funny:
http://homment.com/euro-collapse
"Does a continuing depression actually serve the interests of the wealthy? That’s doubtful, since a booming economy is generally good for almost everyone. What is true, however, is that the years since we turned to austerity have been dismal for workers but not at all bad for the wealthy, who have benefited from surging profits and stock prices even as long-term unemployment festers. The 1 percent may not actually want a weak economy, but they’re doing well enough to indulge their prejudices."
Do you agree?
To even give notion to "the 1% agenda" is sickening and is part of the problem. we need to quit asking,"what is their plan" and start fuckin shit up and wreckin shop.
This is getting a bit ho-hum really. These links refer to USA but Eurozone & UK are in the same place:
Ben's shooting blanks
Measured on this scale, Bernanke’s increase in Base Money goes from being heroic to trivial
Can't avoid stagflation now.
1.28 handle on EURUSD next week.
With all the dirt cheap money swilling out of central banks, one wonders what the growth in malinvestment is like.
That'll be tomorrow's problem if tomorrow ever comes.
Most of the malinvestment is by governments. Very few private sector players are investing much. See my post above.