The ECB Will Fail Given The "History Lessons Of US And Japan", Warns Deutsche Bank

Tyler Durden's picture

Recall that the stated purpose behind the reason why Mario Draghi's ECB is about to launch a European government debt monetization program ranging between EUR500 and 1000 billion is to halt deflation, spark credit creation and rekindle inflation. Alas, if that is indeed the case, then as Deutsche Bank said has already determined apriori, it will be a failure. Here's why from the biggest German bank.

First, a broad strokes preview of what the world's most confused Central bank will do this week:

[The ECB] is trapped down a dark alley and they will bite. For all the pros and cons of public QE as well as the hows and whens, at the end of the day the market has pushed the ECB into that corner. Within the context of the practical limitations of QE, we have no doubt that Draghi once again will leave a warm fuzzy feeling that they are prepared to do all that it takes. Of course, like OMT, it probably doesn’t mean they are buying BTPs come February 1st, but that doesn’t matter for BTPs. It also doesn’t matter for the Euro zone outlook given the dubitancy of QE efficacy.

And here is why the ECB too will follow its peers, the Fed and BOJ, in failing to boost inflation expectations which at last check were below the Lehman collapse levels and sliding fast (see "The Chart That Terrifies The Fed")

We suspect whatever the ECB “under delivers on” in substance, it will “over deliver” in terms of perceived commitment and Draghi rhetoric. So net it is hard to be very bearish on peripherals nor core markets. Core markets ultimately benefit from the perception that there just aren’t enough assets out there even for a small program of Euro 500 billion. As the table below shows the free float as defined by other investors is expected to be a paltry 26 percent this year (after Euro 300 billion in purchases for CY 2015). This compares with almost 50 percent in the US. 


More importantly we doubt inflation expectations will spike sustainably higher on any announcement given the “failed” history lessons of US and Japan as well as doubts about QE making a difference quickly in the Euro zone. This really centers on the issues of the Euro zone’s different financial model (bank not security based) as well as the still ongoing deleveraging of the banks for regulatory purposes.

Ironic, because Zero Hedge pointed out precisely this distinction nearly three years ago in "A Few Quick Reminders Why NOTHING Has Been Fixed In Europe":

And we are also finally glad that with every passing day more and more banks, pundits and "straight to CNBC" experts wearing business suits realize what we said 6 years ago, namely that QE will never work as one can't fix a failed financial system due to record debt problem with more debt and even more props to support an even more failed financial system. And that QE has, is, and will continue failing... for everyone but the 1% of course, who with every passing day continue to tempt not only fate but the guillotines as well. Reference? See the French Revolution, because it is never different this time.

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nmewn's picture

So, "inflate away the debt" and print & tax yourself into prosperity really doesn't work, why...whocouldaknowed.

Time to round up some "economists" yet? ;-)

PartysOver's picture

Financial Engineering: what a beautiful term.  (Face Palm)


knukles's picture

Liquidity Trap.  The abyss of all monetary policy efforts.
LT's a re monetary phenomenon caused by non-monetary factors

More debasement of the Euro and the EU
Flights to gold and dollar to ultimately ensue.

A Global Currency War, in more ways than one.


PS  What's good for Goldman is Good for God's Work and Mankind

cossack55's picture

Where do I sign up for the Committee of Public Safety.  I wanna pull the lever.

TahoeBilly2012's picture

Morality is obsolete, science if the order of the day and science says to print.

knukles's picture

Straight out of Orwell or Kafka's imagery of the kangaroo court in the NWO.
Guilty!  Off with his head!  PRINT!   (The peasantry marches in circles, screaming "I love the ECB", burn the heretics!)

Oh shit, my lights just flickered.  Happening more often when on The Hedge....

GetZeeGold's picture



They're doing it......for the children.


Which of course...are going to be handed the bill.

Son of Loki's picture

Moar QE just means moar money for Fat cats at the top who simply push paper around and deposit the Loot into their secret accounts somewhere; very little if any is used for real growth.

BobPaulson's picture

One must be sure to differentiate between what you want and are dreaming will happen, and is most likely to happen. It is frustrating but helpful. During the reign of terror, the rasoir nationale usually ended up shortening political foes of assorted different powerful people, and apart from a few key Bourbons, did not flush all the roaches out of the kitchen. In the end it was the executioners in chief whose heads were in the basket.

weburke's picture

that was the farnese family and their jesuits reasserting control and punishing opponents, with periferal people killed for this or that.

Save_America1st's picture

"Fail" at what?  This is the whole problem with analysis of what the criminal CB cartel is all about.  They're using the computer technology to destroy all markets so that they can wipe 99.999% of the world wealth out and thus completely take over.

Failing markets are not and mass poverty are not a "fail" for these's all actually a complete success for them.  This market destruction is all by design.  They rule the cycles because they create the cycles.  They've known for a very long time how this was going to play out because they control pretty much all aspects of the cycles on the upside and downside.  They win either way, and it's designed to extract wealth and freedom from the entire world. 

People have to stop thinking in terms like this in regards to corrupt gangster bankster, fasicst/statist corporations and their puppet government sociopaths.

Absolutely NOTHING about all that has so-called "failed" the free market system and what used to be our free society is considered a failure by these psycho fuckers.  It has all been by design and always has been for hundreds of years.  It has been their plan all along. 

We're just trying to live through it and the vast majority of the "folks" have been horribly brainwashed into thinking and believing that these fucktards in charge have our best interests in mind.

Very few of us at this time actually understand what is really going on and how bad things really are.  The Matrix comes to mind in this respect.  Only those few of us who have figured out what the Matrix really is can understand what's really going on in this world right now.  

NOTHING could be farther from the truth that any of this is a "failure" in their terms.  This is all a fucking scam and it nearly always has been...a grand Ponzi scheme...a coupe de tat to take over the world...a criminal conspiracy to destroy all freedom and wealth in the bring in complete tyranny and authoritarianism over the kill almost everyone on the planet who will eventually oppose them or who are just the "useless eaters", etc.  

This is not a "failure" by any means on their part.  They are currently experiencing their greatest success yet over the past 100 years against us.  They've dumbed down the world.  Divided us on countless levels and have nearly conquered us. 

This is a full-spectrum dominance of power and control, and sadly the only way we can beat them is by them winning first and collapsing the world.

Then the real fighting starts and humanity will have it's chance again to destroy these mother fuckers. 


smukster's picture
smukster (not verified) Son of Loki Jan 18, 2015 10:35 AM

Yep, and that's not going to cause any growth nor inflation.

Well of course QE is no solution to anything, it just postpones imminent problems to some point in the near future. Unless it is a temporary emergency measure which gives time to deal with the real problems: Unsustainable debts and interest payments and, most of all, absurd levels of social inequality.

You use the time bought through QE to fix these two crucial points, and it starts making sense.

zeropain's picture

And postponement costs more and more as it is the flow that needs to increase and not the stock as any crack addict knows. Getting higher and higher, yet the latter is going down the hole.

Dubaibanker's picture

The mouthpiece (WSJ) of the 'powers that be' is unhappy as is the IMF puppet of the 'elitists' as probably are the 'US and EU Illuminati' that Switzerland did not adhere to the protocol of playing along....the corrupt insider trading rules as dictated by the top CB's.

The system is broken and as I have said earlier, each country will do anything for their own survival, that started with India reducing interest rates suddenly but was overshadowed by the Swiss removing the useless unofficial peg.

Wait, until countries like Russia, China, Iran, Venezuela, India etc band together and create new blocs like AIIB, SCO, BRICS bank etc and start using yuan or local currencies as trade currencies and reduce their trade with G7 countries.

It is best seen with Russian oil and gas as an example, whatever oil and gas was disrupted by EU not buying from Russia (due to retaliatory sanctions by Russia), Russia ended up selling it to the Turks or the Chinese. Russia didn't lose, but EU did further distancing itself -trade wise- from Russia and China for nothing. South Sea project being scrapped and then bought over by the Russians was another great example to the detriment of the EU.

EU is doomed from the start unless Euro is actually broken and all national states go to using their own currecnies within their own borders and provide each other a mechanism to alter their economic policies by appreciating or depreciating their currencies as and when required based on the trade amongst each other directly and not having political dreams being used to run economic policies, which is what the Swiss have shown happens when the economic polciies / losses collide with political motivations.

Why the news of India and Pakistan joining China and Russia does not make it to worldwide media is beyond me, because these are radical moves away froom the last 50 years of influence of the Westerm empires which is currently breaking down at a very rapid clip globally.

People, countries and ideologies etc always gravitate towards wherever the money is: which is in China!

10 Takeaways From Lagarde’s Swipe at the Swiss National Bank


Russia, China and India building new multipolar world order


Russia, China welcome India, Pakistan joining Shanghai Cooperation Organization
Dubaibanker's picture

The Chinese currency has been rising for about 20 years and is very stable including in 2008 when all currencies went haywire (mostly due to China's positive trade surplus, massive cash reserves and the country has been upgraded every 3 years since mid 1990's even by the 3 rigged rating agencies etc).

You should own yuan, as much as you can diversify into it, aside from the dollar (until it collapses) because one of the most important safe havens will always be the country which will be No 1 consumer and No 1 exporter and the largest user of electricity or cement, steel, oil, cars etc. which in one word is China.

RMB unlikely to depreciate drastically in 2015

artless's picture

That's all well and good except for the MASSIVE debt formation and Biggest bubble ever created not to mention the Chinese demgraphic problem. But as we all know the Chinese are just smarter than everyone else who has tried to keep the lid on things with a totalitarian/fascist/oligarchy shit show the call "government" so, of course, they will succeed where EVERY OTHER SOCIETY HAS FAILED thatis, until they don't which is when I do not want to be any of the Chinese underclass given their history of mass murder when it fits their economic, political, or social needs.

They have until 2017 when the Olympic curse will rear its ugly head. Nine years after the Bejing dog & pony show. Just like Moscow (1980) and just like Germany (1936)

Of course we here in 'Murika aren't in any much better shape. But we CAN exist on our own if need be where China cannot feed itself, or much else for that matter. good luck with that.

Oh and one might notice the capital flight FROM China by those close to The Party as they park their ill gotten treasure overseas and set up escape routes for if and when China takes a tumble. What do those guys know that all the China mouthpieces do not?

Renfield's picture


I marked you up since I think you make good points, BUT I think there's a bigger picture that may be forming here; and that is, China isn't alone in the same way the US is. For resources and military strength, China has a partnership with the Russians. (Just as Russia has a partner in China, to defend against currency attacks.) Sure, this partnership is not the BFF artificial "we'll always be friends" hypocrisy of the "west" - everyone, including in the SCO, seems to show a mature awareness that at some point national interests will divide. But, in terms of a very large organisation defined by a common enemy (the Anglo-Zionist threat), for the time it takes for that enemy to be contained, it seems to be working very well.

I regard the purchases by China of "western" RE & assets less as capital flight, and more as investment. For example, buying Greek ports isn't such a bad idea if you're China, you're wanting to put your collapsing dollars to good use, and your business partner Russia is building a gas pipeline that ends up against Greece. To my eyes, this is a partnership that Iran began, by working around the USD stranglehold on oil through barter trade, and has now grown organically to include most of the world. I see this as a process beginning now, of "scaling up", and I think China is leading this process although Russia is the most visible actor.

I also note that China's leadership, in President Xi, has made a very big show of purging the old guard. (As in its own way, Russia seems to be doing.) This of course does not mean they have purged all corruption from government, but certainly the "old guard" criminals, including those who may have been more sympathetic with the "west", may be looking for places to run with their money. This could be called "capital flight", but it isn't the kind that is going to sink them IMHO. They may not be running from China taking a tumble, but from China catching up to them.

Will China take a tumble? Certainly. As will/is the "west", Switzerland, Russia, etc. But I think they'll easily survive it, based on a new "world order" that seems to be forming, that includes the "west" only as one rather impoverished player among many others.

Just two cents' worth from a peasant spectator.

BobPaulson's picture

I know we want to see the Goldman Sach slanted pool table dismantled but are you serious when you think China is going to do a better job? You lost me there. 

Transparency is the fundamental stength of a capital market, and the US had that for a while. The others can try to break up the monopoly but the key to getting investment and projects off the ground is knowing people can't legally steal you money.

Arrowflinger's picture

The rule of law is dead and will not peaceably be reinstated.

Dubaibanker's picture


I don't believe you are following the anti corruption 'crusade' close enough. It is impacting both 'tigers and flies'. Thousands of prostitutes have been arrested or fled the country. Macau is slowing down due to same. The luxury good sales have declined in China last year. All political persons have sold almost 90% of their property holdings including overseas ones.

All this is great for the country.

Any country who focuses on increasing the GDP, reducing corruption, providing stability in currency, making their banks, oil companies, cement companies the largest in the world and sending people to the moon while having a large military is doing a fantastic job in my view, especially when executing the largest urbanization project through migration without much of a noise in the history of the world!

China's GDP in 1993 was USD 423bn

1998 was 1,020bn

2003 USD 1,450bn

2008 was USD 3,490bn

2014 is USD 9,240bn

That's a Gigantic growth of 21 times or 2,184% in 20 years and this is just the start. Show me one more country who did this growth so fast?

The US did the same over a period of 41 years from 1960 to 2001 when it grew from about USD 500bn to USD 10,920bn in its GDP. That was the best US could do, in its best years, now it runs on fake printed money to artifically inflate its GDP and runs its banks, car companies and real estate companies on faux capitalism model hence the last decade does not even count!

Transparency to the fullest extent is impossible anywhere in the world, we can only hope that it improves in China just like any other. I have not heard any major scandals of 'legally stealing' anyone's money in China in a while. such things happen everywhere, just look at US who is assisting rebel fighters (use your own words here) in Syria using tax payer's funds. How do you explain that for transparency? I dare you to show this news in just one Western media for McCain visiting Saudi today!

America brings lack of transparency as well as hypocrisy together and shows it jointly at its best!

McCain heads US delegation to Saudi Arabia to discuss Syria 


Meanwhile, I do believe China is going in the right direction.

Xi Vows to Wage Enduring Anti-Corruption Campaign in China


williambanzai7's picture

He obviouslly has ulterior motives for the anti-corruption campaign (i.e., eliminate enemies). Nevertheless, the anti-corruption campaign has exceeded the expectations of most knowledgeable China observers.

There is clearly a tectonic global power shift underway and everything is easier to decipher in that light. The Neocon attack on Russia for example is an attempt to interfere with the Russo/Chinese energy/merchantile alliance.

The writing is on the wall for the Western fiat globalists and the days of the red, white and blue hegemon. All their dreaming about an NWO will come to nothing.

disabledvet's picture

The "neo-cons" did not attack Russia.


And what exactly is Russia defending by attacking here anyways?

Putin is a dope.

If he'd taken Kiev and reinstalled the overthrown elected guy that would have made sense, yes?  Instead he's prancing about like Queen Victoria while getting bogged down in the Crimea.

Besides...everyone knows the NWO is run by reptilians.

smukster's picture
smukster (not verified) williambanzai7 Jan 18, 2015 8:15 PM

ulterior motives, yes and no. They are probably involved, yet I do think the CPC is well aware of the fact that corruption hinders the economic development in the regions. They do have some long-time planning, unlike certain other countries.

Yet it is also true that esp. higher ranks close to the party are preparing their escape routes -why? Bc of internal problems which they think will trigger a desaster, or bc they don't want to end up in jail at some point? Or simply bc Europe or NZ are more pleasant societies to live in?

BobPaulson's picture

Transparency is a philosophy which is the ultimate form of honesty. Imagine if your society was so accepting that nobody had anything to hide. Of course it makes it hard for things like intellectual property. I am not sure it is possible, but as a concept it is cool.

I agree China is amazing in ways. So was Russia in its day, going from near feudalism to the first people into space in 50 years. What always kills you is your own elites' greed.

In China I have to say when you walk some of the dark sidestreets at night, it is amazing how safe you feel. It still looks to me like there are issues with crooked financial black pools, but that is only what I have read.

Renfield's picture


Great informative links. Holy cats, this is happening faster even than I thought it would. In my own crystal-ball speculating, I'm beginning to think new currency for North America (or the Federal Reserve system of banks, anyway) earlier this year rather than later.

"It is important to practically launch the process of expanding the organization,” Morgulov said in the interview published on the Russian Foreign Ministry website on Tuesday. “All decisions necessary for that have been taken at an SCO summit in Dushanbe in September last year." (from your TASS link)

"There are different expectations from Russian government that new course in India will fortify Indo-Russian partnership and many signals go in this direction; as well as it could be possible a strategic alliance with China, considering many fields of joint cooperation. The world order is changing and Western countries should take into account the complex network of relations involving Russia, India and China and other Asian countries. These regional powers are no longer only spokesman of an emergent world seeking voice in an anachronistic international system, considering for example India and China aspirations to reorganize board of United Nations, World Bank and International Monetary Fund. Furthermore, Russia, India and China are not only characters of multilateral forums such as BRICS or G-20, but they are already proponents of deep bilateral relations and bearer of new systems of payment in international trade, considering the use of national currencies than could potentially change future global balances of power. These are clear exemplifications of the emergence of a multipolar world order." (from your Pravda link)

Could this announce the "scaling up" that should follow the establishment of all those remnimbi trading hubs from the last few years?

disabledvet's picture

Yes, yes..."but Zero Hedge said this was what was going to happen!" 

smukster's picture
smukster (not verified) Dubaibanker Jan 18, 2015 8:06 PM

After India, Pakistan and Iran, S Korea and Turkey will be next. If Turkey hasn't changed sides already.

Hey, this is a monumental downward turn for the west - would you seriously expect their media to mention it?

Our western media didn't even have the guts yet to frankly tell us we lost central Asia to the SCO.

MsCreant's picture

Did you see the cat crossing in front of the stairway exactly the same way, a second, or even third time?

XqWretch's picture

The "Lessons of History" is an oxymoron. When was the last time any of these so called "leaders" looked at history before making decisions?

zeropain's picture

Its like the matrix movie.  It goes in circles until the one arrives.  A person of greatness that does not fear death and can only do what needs to be done.  Snowden and Segura are from this stock.  Ron paul is of this stock.  these people arevbuild to see the greater good that last beyond themselves.  One day someone will arrive, probably when we need it the most when the public is ready, the one can do must needs to be done.  Wake up the masses and see that focus on your self is an empty endeavour.  More you succeed the bigger the trap.  Accept failure and be weary of success.  That is the true lesson humans evolution or else will be the same trap of seeking better, which is just a created thought.  Reality is you arrived on earth with no effort of your own, there is nothing to save.

KnuckleDragger-X's picture

" Just look at this chrome plated turd, ain't it beautiful? And don't woory there's plenty more where that came from"

strannick's picture

It's nit about inflation, it's about giving govt deficient spending, and buying garbage bonds from banks.

booboo's picture

Right, and to get sovereigns used to having an all encompassing commitee in a far away land strangle thier children in the crib.

zeropain's picture

Science today is a ponzi.  Study quantum particle theory and you find out nothing is fixed. Its all temporary. Trying to build knowledge in a fix rigid way can turn into lies validating lies.  Intuition and instinct that has been instilled through physical tests over thousands of generation are simpler and more reflective of reality.  Simple and slow has its advantages.  Which species do you think will out live the other, humans or ants?  

franzpick's picture



zeropain's picture

Jesus, balsted bankers and defended hookers :)  i like that jesus

Element's picture

Draggi dah druggie ... hard-arm drugs next.

Arrowflinger's picture

May he be aptly named by history as "Mario Dragheap"....Double  entendre is sublime when the undoing is sub prime (rated AAA)


Usurious's picture
Usurious (not verified) nmewn Jan 18, 2015 9:03 AM



@newman..............dont forget to round up the TRIBE bankers



nmewn's picture

I think you gave me an unearned vowel in yes, I'm for equal opportunity trial & execution.

Usurious's picture
Usurious (not verified) nmewn Jan 18, 2015 9:37 AM



not sure how you coulda left out the bankers out of your original comment........too many beers last nite?

nmewn's picture

Do you have (as in your original salutation to me) something you would like to say directly to me? You need to say it or STFU, this isn't a place where speech codes are enforced or political correctness is normal.

The symbiotic relationship between bankers, economists, government and press is well known here, I also didn't mention welfare queens or foreign aid.

Would you like my list so you can check for your approval?

Usurious's picture
Usurious (not verified) nmewn Jan 18, 2015 10:13 AM

''Time to round up some "economists" yet? ;-)''

as if rounding up the economists will solve our problems

..just seemed like a odd comment to me and I dont believe Ive ever heard that before on need for you to get bent out of shape....


A subtle misdirection on your part?


nmewn's picture

You don't think young aspiring bankers are graded on their understanding of the "finer points" of Keynesian/socio-economics at universities world-wide by professors who claim to be economists? That some of those "economists & bankers" don't wind up on governmental bodies like puss filled boils ready to lance?

And the only "subtle misdirection" in our little interaction here was your referring to me as newman (childish) and I even gave you a pass on that and you pretending that the central bank of China or Russia is (apparently) run by some sort of "tribe".

What tribe would that be boi?

Usurious's picture
Usurious (not verified) nmewn Jan 18, 2015 10:55 AM

last I checked, it was the tribe banksters that printed the money and stole your labor thru the INTEREST(USURY), not the economists.........

but whatever........your original comment stands

Death to the economists.........LMFAO

nmewn's picture

Authorizing the printing of money is a function of the state, Austan Goolsbee, Christina Romer, Paul Krugman etal are "economists" who advocated for that money to be printed from thin air and all advised the state to take that course, so they don't get a pass from me and they shouldn't from you.

Did I or did I not say symbiotic relationship and what part of that concept escapes you?


As I said:

"And the only "subtle misdirection" in our little interaction here was your referring to me as newman (childish) and I even gave you a pass on that and you pretending that the >>>central bank of China<<< or Russia is (apparently) run by some sort of "tribe".

Time has a way of removing any & all doubts about "tribalism" doesn't it?

Refer to me as___from now on, idiot.

GMadScientist's picture

Do you think that the sheep would stand for the shearing without a consistent refrain from the 'economists' that goober policy and business as usual from the banksters are what we need?

But keep apologizing for their apologists; makes you look like a freakin' genius that.