One Trillion Euros Spent & This Is What Draghi Has To Show For It

Tyler Durden's picture

It's been 16 months since the European Central Bank began its voyage into the unknowable in March 2015, and as The FT notes, this week marks a milestone - it has now purchased over EUR 1 trillion in government (and corporate) bonds since it began QE.

The ECB buys bonds through the eurozone’s national central banks and in line with a member state’s overall contribution to eurozone GDP.

 

Among its three largest economies, the ECB has snapped up a total of €238bn in German Bunds, €189bn in French paper, and €164bn in Italian bonds since last March.

 

Policymakers announced they would begin buying non-bank corporate debt earlier this year. Total ECB holdings of company bonds now stand at €20.5bn, with asset backed securities hitting €19.91bn.

 

The ECB will be meeting for its lateset monthly policy decision on Thursday and is poised to announce a six-month extension to its QE programme until September 2017.

 

According to estimates from Credit Agricole, the ECB will have hoovered up over half the eligible universe of government debt by the end of the year, forcing policymakers to tweak their QE rules in a bid to keep hitting its €80bn a month purchase target.

The trillion euro surge is driving the ECB's balance sheet up towards The Fed's...

 

The big problem is - it's not helping the real world...

 

But don't expect it to stop anytime soon. If the following utterly insane words from another ECB member show...

  • *ECB'S NOWOTNY: MON POLICY PROVED `MORE POTENT' THAN THOUGHT
  • *ECB'S NOWOTNY: EUROSYSTEM HAS SHOWN IT CAN ALWAYS DO MORE

That's just total bullshit...

Simply put - it's either pure propaganda-driven lies or the people pulling the strings are blinded by faith and aiming for the cognitively dissonant world record.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
NoWayJose's picture

Without a gold standard there is no constraint on Central Bank balance sheets.

Squid-puppets a-go-go's picture

When will these dolts get the memo?

You cannot create the inflation you want to sneak your way out of legacy debts, when neg interest rates and refusal to enforce insolvencies keeps too much competition alive who are undercutting each other in prices

one foot on the brake, the other on the pedal

bleu's picture

$5 Billion/year and this is what we get: http://wp.me/p4OZ4v-Dg

Norwegianfish's picture

Can anyone explain  what this is?

They lend money to the french, german, italian governments.
Don't this have to be paid back?
I remember something about italian debt a few years back...

Offthebeach's picture

It never gets paid back. It is fiat. Paper. Computer pixel digits on a screen. It is like meth injection in a corpse.

But, seriously, what you might better want to ask is whst is the cost of this...action ( for lack of a better word )

Well for the ECB bankers/economist, no cost.
Governments, no cost.
Savers, pensioners, young people, a you are fuk'd.

So, the private economy, what's left of it, take another corrisive hit. Banks, government continue to dream on drugs and wait out toll their last to fail pensions kets them live like kings amongst the ruins of new debt serfdom.

Raffie's picture

Where is the pics of Draghi's new mansion, private jets and yaught?

offwirenews's picture

CB's don't do what they do for the general economy. They run their presses for equity and debt markets

Yen Cross's picture

  Draghi has Junkers  totem pole UP  the European Commision > POOP SHUTE

illuminatus's picture

What a scam. Central bankers tell us that they are buying up government and corporate IOU's to help us using money they print at will. You know what? They will make us pay them back, and it won't be with fiat. How long will it take for enough people to wake up to this fact and stop them? I don;t know how.

Troy Ounce's picture

 

That's why God created pitchforks and man perfected them

Jballsquared's picture

How is a bank printing trillions for the banks to use any way they want "not helping"?

And why are you comparing it to irrelevant things like inflation and economic growth?

You sure don't understand banking son!

1manrme's picture

" where's the kaboom? There's supposed to be an earth shattering kaboom." - Marvin the Martian.

UnschooledAustrianEconomist's picture

Ewald Nowotny is the head of Austrian National Bank. He is a socialist and for sure he is a moron.

assistedliving's picture

TPTB bailout II.  Rich dumping their losses on the lumpenproletariat ie taxpayers.

what else?  move on

Kirk2NCC1701's picture

Money cannot navigate in perpetuity any more than a ship can w/o hard Reference Markers (Stars, Compass, GPS).

Eventually, ALL fiat currencies must re-index to a hard Marker or Reference Frame. Some are forced to do it sooner, some (USD, JPY, EUR) can do it later.

Arnold's picture

State owned commercial paper..............

There's a word for that.

Technically, with out any deep thought, the state can set the price of its' assets.

Youri Carma's picture
WHERE’S THERE A CRASH? WORLD ECONOMY COLLAPSING!!! - HEADLINES AUG 2016 - FINAL EURO ZONE

Eurozone Factory Activity Weakens In July
Eurozone June Retail Sales Remain Flat
IMF Economists Urge ECB To Focus More On Asset Buys As Rates Near Limits
Eurozone Q2 Economic Growth Cools
Eurozone Q2 GDP Growth Eases In Q2 To A Meager 0.3%
Eurozone Construction Output Remains Flat In June
Eurozone Trade Surplus Shrinks Unexpectedly In June
Eurozone Consumer Confidence Weakens For Third Straight Month
Eurozone M3 Growth Eases In July
Eurozone Economic Confidence Weakens In August
Eurozone Economic Confidence At 5-Month Low
Eurozone Factory Growth At 3-Month Low

Germany's Factory Orders Fall Unexpectedly In June
German Growth Momentum Slowed In Q2, Ministry Says
Germany's Economic Growth Slows In Q2 To 0.4%
Germany's GDP Growth Eases In Q2
Germany's Private Sector Expands At Slower Pace In August
German Construction Orders Fall In June
German Ifo Business Confidence Drops Unexpectedly
German Business Confidence Falls To 6-Month Low

Austria's Manufacturing Sector Growth Weakens In August
Swiss Retail Sales Continue To Decline
Swiss Economic Expectations Fall Further In August
Swiss Trade Surplus Declines In July
Swiss Industrial Output Declines In Q2
Swiss KOF Leading Indicator At 8-month Low

Dutch Economic GDP A Paltry 0.6% In Q2, Same As In Q1
Belgium June Trade Swings To Deficit
Belgium Business Confidence Tumbles In August

Denmark Retail Sales Fall In July
Norway Industrial Production Plunges In June
Norway's Jobless Rate Rises In July
Norway Retail Sales Unexpectedly Fall In July

Sweden Jun Industrial Production Falls Unexpectedly
Sweden Household Consumption Dips In June
Sweden's Capacity Utilization Falls In Q2
Sweden Economic Sentiment Weakens Unexpectedly In August
Sweden Retail Sales Fall For Second Month
Sweden Manufacturing Growth Eases Sharply In August
NIER Trims Sweden's 2016 Growth Forecast
Sweden Current Account Surplus Declines Notably In Q2

Finland GDP Growth Halves In Q2
Finland Retail Sales Drop In July
Finland June Trade Surplus Revised Down
Iceland Cuts Key Interest Rate For First Time Since 2014

French Current Account Deficit Widens In June
French June Trade Deficit Widens
French GDP Stalls In Q2
France Manufacturing Sentiment Weakens In August
French Consumer Spending Falls Unexpectedly In July

U.K. Factory Activity Weakest Since Early 2013
U.K. Service Sector First Contraction Since 2012 Worst In Over 7 Years
British Construction Sector Shrinks Most Since 2009 Crisis
U.K. Construction Sector Contracts In July
U.K. Growth To Ease To 1% Next Year: NIESR
U.K. House Price Inflation Steady In July - Halifax
Bank Of England Unveils Massive Monetary Stimulus On Weak GDP Outlook
BoE Cuts Key Rate For First Time Since 2009; Expands QE
U.K. Construction Output Falls In June
U.K. House Price Balance +5% In July - RICS
U.K. House Price Inflation At 20-month High
U.K. House Prices Dip 1.2% In August - Rightmove
U.K. Budget Logs Below Expected Surplus In July
U.K. Budget Surplus Falls In July
U.K. Mortgage Approvals At 18-Month Low
U.K. Mortgage Approvals Decline In July
U.K. Construction Sector Contracts In August
British Construction Sector Shrinks In August

Ireland Manufacturing Growth At 38-Month Low
Ireland Youth Unemployment Rose To 16% from 15.4% In June
Ireland Service Sector Growth Eases In July

Italy Factory Growth Weakest In 1-1/2 Years
Italy Industrial Production Unexpectedly Falls In June
Italy's GDP Growth Remains Flat In Q2
Italy Consumer Confidence, Business Sentiment Weaken More Than Expected
Italy Economy Stagnated In Q2
Italy Factory PMI At 20-month Low

Croatia Retail Sales Fall For First Time In 5 Months
Croatia Industrial Production Growth Slows Sharply
Malta Industrial Production Decline Worsens In June

Spain's Factory Activity Expands At Slower Pace
Spain's Industrial Output Growth Eases In June
Spain Retail Sales Growth Eases In July
Spain Unemployment Rises In August
Portugal Industrial Production Falls Further
Greece Manufacturing Sector Contracts In July
Greece Revises Q2 GDP Growth Lower To A Very Meager 0.2%

Poland Jul Manufacturing Growth Slows More Than Expected
Poland Q2 GDP Growth Accelerates Less Than Forecast
Czech Manufacturing PMI Falls Unexpectedly To 40-Month Low
Czech Retail Sales Growth Eases In June
Czech Current Account Turns To Deficit In June
Czech Economic Growth Eases In Q2
Slovakia Retail Sales Growth Slows In June

Hungary May Trade Surplus Revised Down
Hungary Jun Industrial Production Falls Unexpectedly
Hungary June Trade Surplus Revised Down
Romania June Industrial Production Declines

Estonia Industrial Production Falls Further In June
Estonia's GDP Growth Slows In Q2
Latvia Jun Current Account Deficit Widens
Lithuania Industrial Production Drops In July
Lithuania Retail Sales Growth Eases In July
Lithuania Q2 GDP Growth Eases In Q2

Turkey's Manufacturing Activity Contracts Further
Turkey Current Account Deficit Widens More Than Expected
Turkey Jobless Rate Rises In May
Turkey Trims Lending Rate By 25 Bps
Turkey Business Confidence Drops In August

  

UNEMPLOYMENT - HEADLINES JAN-AUG 2016
 
EURO ZONE

– French Jobless Claims Climbs for Second Month In June
– Italian Jobless Rate Rises In June
– Swiss Jobless Rate Rises In April
– Norway Jobless Rate Rises In June
– Norway Jobless Rate Climbs In July
– Sweden Jobless Rate Rises In May
– Sweden Jobless Rate Rises In June
– Finland’s Jobless Rate At 1-Year High
– Ireland Youth Unemployment Rose To 16% from 15.4% In June
– Latvia Q1 Jobless Rate Rises
– Spain Unemployment Rises In August
– Portugal Q1 Jobless Rate Rises
– Greece Q1 Unemployment Rate Rises
– Turkey Jobless Rate Rises In May

Dame Ednas Possum's picture

Fiction peddling conspiracy theorising party pooping extremist.

Troy Ounce's picture

 

Well done YourI: that is an impressive list

Father ¢hristmas's picture

It's a pump and dump.  Pump up bonds, consequently pump up equities, then dump em.  Muppets BTFD, then CB's pump again, then dump em.

If muppets are in the club, they can ride the CB wave and profiteer on the dump.  Otherwise, the tide rolls out and they're caught with their baby dicks flopping out in front of the whole beach.

What turns it into a Ponzi is the fact that they can't bust these joints out yet.  They have to keep up the illusion of solvency with these corporate and gubmint entities, so it takes moar air to reinflate the bubbles after every dip.

starman's picture

Where no man has gone before!  

Steeley's picture

" MON POLICY PROVED `MORE POTENT' THAN THOUGHT"

Certainly more potent than their thoughts, anyway..

Swamp Yankee's picture

Next time spend the Trillion on pizza, leastways then you get pizza.   -SY

HenryKissingerChurchill's picture

so He will nationalize the whole economy

then world crisis

then jubilee (+ war maybe?)

then cronyism

rinse and repeat

itstippy's picture

Back when Quantitative Easing and ZIRP were first contemplated by central banks they were presented as extreme, unorthodox methods of jolting a nation's economy out of a stubborn rut.  They were to be limited, targeted, and brief - like using a defibrillator on a heart patient to get things pumping normally again.  There was much discussion about slippery slopes, moral hazards, and exit plans.

 

Last of the Middle Class's picture

It's the printing presses that are going to send us all back to the stone age. What irony.

J J Pettigrew's picture

One thing for sure...

the Central Bankers will be insulated from their madness with pensions and compensation packages...probably with

inflation adjustments....

where can we sign up?

J J Pettigrew's picture

What if it turns out that ultra low interest rates actually DETER economic activity...???

and that ultra low rates DO have an initial short term stimulus, but protracted, they are incredibly dangerous...

prompting asset misallocations and massive debt creation......

fajensen's picture

OBECTION: Those EURS are *not* spent. They are locked up in assets with zero market value to keep the book value from being written down. It's just bits moved from on disk array to another. Never leaves the vaults of the ECB.

If we actually went to town and spent one trillion EUR on goods and services - even on horses, hookers and blow - we would certainly see an uptick in economic activity and even some inflation.

vbouwmeester's picture

The shit keeps getting closer to the fan.

JailBanksters's picture

What has Draghi got to show for it ?

A Nice umberella stand in the foyer of the ECB

 

Bemused Observer's picture

If these central banks are buying all this (likely bad) debt, what's to stop a government from waiting until most of it is 'owned' by the central bank, then just leaving that bank with the debt and saying bye bye? Leave them to fight it out in bankruptcy court. Any assets they own can be seized to cover taxpayer funds that have been used, leaving any private investors fucked.

Our Fed is really a private bank, not part of the government. Like any other company, it CAN go bankrupt, out of business. Are the others similar?

What's to stop a government, or governments, from loading their excess obligations on one company, and letting that company die, taking all the bad debt with it? If they all do it, they can wipe out much of the problem, and start over. Any blame can be put on the bank, lord knows there are plenty of 'hinky practices' the public can be made aware of, and politicians can claim they went after the responsible ones in letting the CBs die.

I seriously doubt that there'd be any protests by the public in support of those CBs. In fact, the public would be quite willing to join in and beat that scapegoat.

The choice is between pissing off a small but wealthy subgroup and preserving the system, or protecting that subgroup at the expense of the entire system, which would end up wiping everyone out anyway. So you can survive with some serious wounds now, or you can wait around until your head gets blown clean off...what would YOU choose?