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EUR Slides On News ECB May Expand QE To Muni Bonds Next
After a disappointingly un-uber-dovish speech this morning by Draghi,it appears The ECB needed to full ease-tard to make sure 'markets' believe. EURUSD tumbld 50 pips - to the lows of the day - after Reuters reports that, in what is becoming increasingly clear desperation, The ECB is mulling buying the debt of cities and regions.
As Reuters reports,
The European Central Bank is examining whether to buy municipal bonds of cities such as Paris or regions like Bavaria, according to people with knowledge of a possible extension of its one-trillion-euro-plus money printing scheme.
This regional bond buying could be one in a series of measures to be rolled out in the coming months, although one of the sources said time was short for a full launch in December and that this would likely come by March next year.
The ECB declined to comment.
As part of preparations for the next rate-setting meeting of policy-setters on Dec. 3, ECB officials are now analysing whether and how to extend its shopping list to municipal bonds, issued by, say, Madrid or Mainz, or a federal German state.
"You have big markets, such as Spain and Italy. France has a well developed market," said one person.
According to data from Thomson Reuters IFR, almost $500 billion of bonds issued by European cities and regions are in circulation. The regions have sold more than $76 billion of bonds over the last year.
The source said that while some cities were risky, they had the fallback of central governments. Municipal bonds typically have a lower credit rating than governments. It is a fragmented market in Europe, with many small issues.
But you should not worry that The ECB is wastuing European taxpayer capital...
"Some cities in Spain or Italy are bust. But a city will always be there," said the person. "Someone will always pay back the debt. They have the backing of the government and the ability to raise taxes."
We have some other suggestions...
Dear @ECB here is the "to buy next" list:
- Copper
- Zinc
- Porcelain bidets
- Lumber
- TWTR
- 1952 Topps Mickey Mantle cards
- Brent
— zerohedge (@zerohedge) November 11, 2015
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well that should get them to stop voting for leaving the EU...mayors are licking their lips...raises for everyone...and a new office building...new cars and trucks..man can we spend now..
They keep expanding the potential QE base. First it was big banks, then governments got their share of the free cash, then the medium sized banks came to play for freebies, and now Munis.
Now it's time to make some money! :)
http://tinyurl.com/nhjrozp
Before I click links here, I always check how long you have been a member.
You've been here a little more than 3 weeks.
Not clicking. No one else should either.
To be fair, some of us have had to make new accounts because some SJW at Zerohedge didn't like our joke.
It would help if he/she/it had spelled the "Name" correctly.
They keep expanding the potential QE base
Of course they are. There will soon be no demand for any of this crap.
Obama will want in on this action since places like Chicago are in full melt-down and nobody with a clue wants their bonds......
WTF Janet? You're not going to let the rest of the world beat us at the print fest are you? Turn those printers up to plaid and show them who's boss bitch!
"Someone will always pay back the debt..."
Yeah right
Now that the EU is aggressively importing the islamic cult, the EU will need to monetize the inevitably exploding muni debts, so this is an essential next step, not discretionary.
How do you decide which city will get cash and which not?
It's actually the smaller once that are suffering and they're all interconnected to banks and bigger cities and now even pension funds.
So you would need to print a horrible ammount of money which those cities will probably spend on yet another public work to attrack tourists away from other cities.
Cities aren't savers, they always have spend twice what they got and actually could borrow.
Easy: which big banks own the cities' bonds?
The Central Banks are well along in the process of becoming repositories for worthless financial "paper".
This doesn't matter much right now, but it will when inflation eventually begins to leak out of asset markets and into the general price level.
With their balance sheets hopelessly compromised, the Central Banks will lack the ability to meaningfully "tighten" through open market operations. Other means (such as adjusting rate paid on excess reserves) will prove totally ineffectual.
Result: As per Taleb's thesis - we go straight from deflation to hyperinflation, with barely a whiff of inflation in between.
fixed it: The ECB is mulling buying cities and regions
Kinda like each region can print their own money
OH Yes! That will make all Municipalities more responsible for their finances!
Expanding the QE Base will only expand the Extent of the Systemic risk... Well done!
I dont want to be there when it pops!
Pathetic.
Coming soon to an Illinois jurisdiction near you!
They really can do and say whatever they want without ANYONE criticizing them for destroying Europe on purpose. These policies are utterly ridiculous, anyone knowing the least bit of macroeconomics could tell you that.
If Draghis' jawbone gets any bigger he's going to have to start feeding at the trough.
"and the ability to raise taxes."
That is of course assuming the citizens have money to pay the higher taxes. When they have to choose to either a) feed their family or b) pay taxes, that's when heads of heads of states roll. Wash, rinse, repeat. When someone brings down the 5 ruling familes of the world, shit will get reset properly.
Great, all we needed in Italy. A call to local politicians to load up on debt and pass the buck to taxpayers. Congratulation, all concerned !!!!