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5 Key Takeaways From The ECJ's Kinda Sorta 'Thumbs Up' To Draghi
Via Dow Jones,
An adviser to the Luxembourg-based European Court of Justice (ECJ) has delivered a tentative thumbs-up to an ECB bond plan unveiled in September 2012 that was aimed at countering euro break-up fears.
The nonbinding ruling has garnered a lot of attention in financial markets, even though the program under review, called Outright Monetary Transactions, hasn't been used. Its mere presence was enough to convince investors that the euro was here to stay, and sparked a lasting rally in Spanish and Italian bond markets.
Still, Wednesday's ruling had implications for a separate government bond purchase plan that the ECB is widely expected to announce at its Jan. 22 meeting. That program, known as quantitative easing, would be aimed at raising the money supply and lifting inflation toward the ECB's 2% target. Unlike OMT, it would certainly be used.
With consumer prices down on an annual basis in December for the first time in over five years, financial markets consider QE to be a given, and the court's decision appears to give the ECB wide leeway in designing a program.
Here are five takeaways from the court's findings.
#1: OMT is legitimate
A lawsuit brought by German lawmakers and academics argued that the OMT was outside of the ECB's remit and amounted to central bank financing of governments. The ECJ's advocate general said: "The ECB must have a broad discretion when framing and implementing the EU's monetary policy, and the courts must exercise a considerable degree of caution when reviewing the ECBs activity."
#2: But there are Caveats
The ruling isn't a total green light. Safeguards are needed to ensure that the program doesn't violate ECB rules against financing governments. The opinion also suggests that the ECB should avoid buying bonds of a eurozone government close to the time that the government is selling bonds in the market, to prevent prices from being distorted.
These caveats, however, don't appear too stringent.
#3: Its Not the Final word
The advocate general's opinion doesn't end the process. The full Court is expected to issue its ruling by the middle of the year, though it typically follows the guidance of its adviser. The German constitutional court still must render its final verdict after taking the ECJ's decision into account.
#4: QE looks good to go
The opinion on OMT was never expected to completely derail QE. It's a different program with a different purpose. Still, strict limits on OMT could have tied the ECB's hands a bit on QE when it comes to the size of the program and seniority of ECB bond holdings.
Wednesday's opinion "means that no additional legal hurdles stand in the way of ECB QE, for which we see a 90% chance to be announced at one of the next two meetings," said Christian Schulz, economist at Berenberg Bank.
#5: The ultimate verdict
With the European Court having said its piece for now, it will be up to financial markets to decide whether any QE program is sufficient to boost the eurozone's growth prospects and lift inflation. That verdict could come as soon as Jan. 22.
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Sadly - for now - the EUR devaluation from the decision has been extinguished on the back of the weak US retail sales...
But likely has further to fall...
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Some more Wed humor: http://bloomberg.econoday.com/byshoweventfull.asp?fid=466654&cust=bloomberg-us&year=2015&lid=0&prev=/byweek.asp#top
Poor docile bastards. .5 % rise and they're all toast.
The chart says it all lol
Pretty easy to get a huge increase when you have about ten people buying a home every week. Just because you apply for a mortgage doesn't mean you'll get one.
One of my colleagues just signed his life away for a $2500 a month mortgage, which he can afford if both him and his wife have a job. He bought an old house in a fairly crappy city. But that is what you get when new homes are going up for the average cost of $550k. Better hope his wife doesn't get fired, then he is on the hook for 60% of his monthly take home pay.
Was there ever any doubt the ECB would get what they wanted? I mean, really, Have we not seen enough in the last 6 years that these decisions would come as a surprise to any of us?
There was always the slight hope that commonsense would break out but apparently the courts avoid it like the plague. So I figure that Draghi is going from resigning in disgrace to eventually being a crash test dummy for the guillotine....
There are no rules when it comes to central banks.
And there is no such thing that a law that cannot be turned on its head by a judiciary determined to do so. Reverse discrimination is ok, 5,000 years of heterosexual "marriage" means nothing, the right to keep and bear arms means a single shot 22 for shooting squirrels.
World: "So... is ECB QE legal?"
ECJ: "Well, it's not illegal. At least as long as they don't violate any laws doing it."
Why do I hate lawyers again?
Of course there are rules, the law of the jungle are rules...kinda...
PPT.....Time to march out a fed governor and maybe hint at some easing or ZIRP forever!
PPT.....Time to march out a fed governor and maybe hint at some easing or ZIRP forever!
Europe is in big trouble and this ruling does nothing to address the coming deflationary collapse.
http://www.globaldeflationnews.com/as-early-as-2011-ewis-analysis-warned...
On Jan 25 the Greeks will tell the Troika and Draghi to bend over.
there is zero chance that the greek debt wont be restructured. Only question is will the US taxpayer (IMF), or the German Taxpayer take it in the shorts.... the rest is a foregone conclusion.
Remember all the Euro problems two years ago and how nothing was fixed, but some guy that worked for Goldman Sachs said he would do "Whatever it takes" and the problem was fixed because even though nothing was done to fix it there was a promise to fix it.
Wouldn't it be so awesome if the engine in your car was about ready to blow up and your mechanic could just say he would promise to fix it and you could keep driving for another 100k miles.
OH YEAH, THAT DOESN'T WORK IN THE REAL WORLD.
There's nobody better than Mario Drughi at spending other people's money (OPM). Well maybe Ben B!
Whose got two thumbs and loves QE?
some folks
The Luxembourg-based ECJ, which interprets EU law, works hand in glove with the globalists to speed ever closer political union and central control in Europe.
Hence, just recently Britain, according to The Telegraph, was told “to change its immigration rules by European Union judges over a controversial case allowing British citizens to bring foreign relatives to this country.
“The European Court of Justice (ECJ) said Britain cannot block non-EU family members from entering the country without a travel permit, providing they are settled in another EU country. “
The ruling came “after Sean McCarthy, a dual British and Irish national who lives and works in Spain, and his wife, Patricia McCarthy Rodriguez, a Colombian citizen, lodged legal action against Britain.”
Ever expanding its judicial overreach, World Affairs writes regarding the ECJ:
“After years in the shadows, the Luxembourg-based, two-tier European court system—the Court of Justice (ECJ) and the General Court (previously called the Court of First Instance), as distinct from the European Courts of Human Rights in Strasbourg—has emerged as what Lord Mance, a leading British judge, calls ‘a central achievement of the European Union, a court with unparalleled transnational power.’”
http://www.telegraph.co.uk/news/uknews/immigration/11300829/European-court-ruling-threat-to-Britains-borders.html
http://www.worldaffairsjournal.org/article/judicial-reach-ever-expanding-european-court-justice
Oldl-fashioned sovereignty, anyone?
"Damn that Lord Menace!"
JR, from the Telegraph article you linked
"It comes after Sean McCarthy, a dual British and Irish national who lives and works in Spain, and his wife, Patricia McCarthy Rodriguez, a Colombian citizen, lodged legal action against Britain.""The Luxembourg-based ECJ, which interprets EU law, ruled in the McCarthys' favour stating that freedom of movement rules do not allow measures which preclude family members from entering a member state without a visa. The court ruled: "Where a family member of an EU citizen who has exercised his right of freedom of movement is in a situation such as that of Ms McCarthy Rodriguez, that family member is not subject to the requirement to obtain a visa or an equivalent requirement in order to be able to enter the territory of that EU citizen’s member state of origin. The couple have two young children who are both British citizens."
So what do we have here? Sean McCarthy is British, and has two British children from his wife Patricia, which isn't British, and claims she should not need a visa to enter the UK
Would you, as judge, have ruled that she has to get a visa? really?
not that long ago she would have had a British citizenship just for being married to a Brit, or being the mother of two Brits
She’s a foreign national; she probably does not have loyalty to Britain.
The error in the court’s judgment is the precedent which goes beyond Ms. Rodriguez. It now opens the door to the next variance leading to the European Union’s primary goal: open borders and freedom of movement for all peoples in Europe to include Britain. Britain had hoped to forestall this immigration “assault” from the world.
A court ruling is often made in a case whereby there’s sympathy for the participants but the precedent goes on quickly to encourage abuse, as the Court knew and anticipated when it took the case.
Once again, the court proves that justice and law are different as law is evermore what the rulers say it is.
You ask: “Would you, as judge, have ruled that she has to get a visa?” Yes, I would. Ms. Rodriguez is a foreign-born individual; why would she not be required to get a visa? Her loyalties, most likely, are not to Britain and as such she needs to be accounted for while she’s in the country. The couple knew this when they married.
In California, the bureaucrats suggest you spend several days reviewing their 104-page drivers guide rules and laws and suggestions and advice in order to pass the test for renewal of your driver’s license where you are allowed to miss no more than three questions. How does this compare with the “sacrifice” of obtaining a visa? One kind of wonders who was helping this couple in this lawsuit that went all the way to Luxembourg.
In that undocumented (illegal) residents of California are now being encouraged to obtain drivers licenses, if we want true freedom of movement, we need to have the Luxembourg court outlaw all drivers tests because of the inconvenience (like in getting a visa).
The globalists use these court rulings at stepping stones...
Barclays - "Big"
Big will end up as another Ponzi scam. The shell game is very transparent. Dispite MSM hidding the facts to mouthbreather audience.
http://www.netdania.com/Products/News/ResearchAnalysis.aspx
Whats stopping the ECB from flipping the EU the bird and doing what it wants anyways?
Draghi the jawboning master... I'll probably end up going long ecb/usd
Answer: 100%
Question: What is the probability that Mr. Yellen is on the phone telling Draghi that this QE has to happen at any and all costs?
EU... it's your turn. The baton is in your hands. But don't worry, we'll be teed up with QE4 when you've hit the buy button for the last time.