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EUR Slides On News ECB May Expand QE To Muni Bonds Next

Tyler Durden's picture




 

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...

 

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Wed, 11/11/2015 - 12:04 | 6777374 youngman
youngman's picture

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..

Wed, 11/11/2015 - 12:08 | 6777397 Haus-Targaryen
Haus-Targaryen's picture

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.  

Wed, 11/11/2015 - 12:36 | 6777536 Surviver22
Surviver22's picture

Now it's time to make some money! :)

http://tinyurl.com/nhjrozp

Wed, 11/11/2015 - 12:38 | 6777552 Haus-Targaryen
Haus-Targaryen's picture

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.  

Wed, 11/11/2015 - 13:03 | 6777664 OrangeJews
OrangeJews's picture

To be fair, some of us have had to make new accounts because some SJW at Zerohedge didn't like our joke.

Wed, 11/11/2015 - 14:06 | 6777959 Farqued Up
Farqued Up's picture

It would help if he/she/it had spelled the "Name" correctly.

Wed, 11/11/2015 - 13:22 | 6777739 JRobby
JRobby's picture

They keep expanding the potential QE base

Of course they are. There will soon be no demand for any of this crap.

Wed, 11/11/2015 - 12:18 | 6777444 KnuckleDragger-X
KnuckleDragger-X's picture

Obama will want in on this action since places like Chicago are in full melt-down and nobody with a clue wants their bonds......

Wed, 11/11/2015 - 12:15 | 6777379 Dr. Engali
Dr. Engali's picture

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!

Wed, 11/11/2015 - 12:06 | 6777381 Hidden Front
Hidden Front's picture

"Someone will always pay back the debt..."

 

Yeah right

Wed, 11/11/2015 - 12:07 | 6777390 InnVestuhrr
InnVestuhrr's picture

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.

Wed, 11/11/2015 - 12:08 | 6777395 Sudden Debt
Sudden Debt's picture

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.

 

Wed, 11/11/2015 - 13:54 | 6777886 hoos bin pharteen
hoos bin pharteen's picture

Easy: which big banks own the cities' bonds?

Wed, 11/11/2015 - 12:09 | 6777396 Bam_Man
Bam_Man's picture

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.

 

Wed, 11/11/2015 - 12:10 | 6777408 unplugged
unplugged's picture

fixed it:    The ECB is mulling buying cities and regions

Wed, 11/11/2015 - 13:08 | 6777686 RaceToTheBottom
RaceToTheBottom's picture

Kinda like each region can print their own money

Wed, 11/11/2015 - 12:23 | 6777476 TTaco
TTaco's picture

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! 

Wed, 11/11/2015 - 12:29 | 6777506 Yen Cross
Yen Cross's picture

    Pathetic.

Wed, 11/11/2015 - 12:38 | 6777549 Panafrican Funk...
Panafrican Funktron Robot's picture

Coming soon to an Illinois jurisdiction near you!

Wed, 11/11/2015 - 14:02 | 6777931 Kaervek
Kaervek's picture

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.

Wed, 11/11/2015 - 14:08 | 6777970 Yen Cross
Yen Cross's picture

   If Draghis' jawbone gets any bigger he's going to have to start feeding at the trough.

Wed, 11/11/2015 - 14:26 | 6778070 firstdivision
firstdivision's picture

"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.

Wed, 11/11/2015 - 16:31 | 6778660 burocracy
burocracy's picture

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  !!!!

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