ECB Embarrassment: €18 In QE Generated Just €1 In GDP Growth

Tyler Durden's picture

After almost two years of the quantitative easing program in the Euro Area, economic figures have remained very weak. As GEFIRA details, inflation is still fluctuating near zero, while GDP growth in the region has started to slow down instead of accelerating. According to the European Central Bank data, to generate 1.0 euro of GDP growth, 18.5 euros had to be printed in the QE, which means that €80 billion have thus been wasted almost every month!

This year, the ECB printed nearly €600 billion within the frame of asset purchase programme (QE). At the same time, GDP has increased by… €31 billion; even if up to the end of 2015 the ECB issued €650 billion during its QE program. Needless to say that the Greek debt is “only” €360 billion and there has been no chance of a relief, so far.

 

The question is where this money from the QE goes and who benefits from it. Clearly it is not the real sector, the so called Main Street of French, Italian or Portuguese cities (Greece is not under the QE program). European stocks are still weak, too, while stock exchanges in the USA are hitting their records. So, is the ECB serving Europeans?

Source: GEFIRA

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zippy_uk's picture

But Goldman Sachs and associates did alright.. CARRY ON....

Looney's picture

 

It looks like Draghi’s “bazooka” is just a limp dick with a trigger.  ;-)

Looney

zippy_uk's picture

What counts is who dick, and who (pl)  that dick as been in

pathosattrition's picture

QE isn't supposed to generate growth. It's just low-inflation cronyism money-printing. More money for the rich, without the effort of productive labor or the erosion of inflation.

insanelysane's picture

Krugman says that they aren't trying hard enough.  They just need more QE.  They'll make it up in volume.

Ghost of PartysOver's picture

I personally would like to thank all Europeans for donating their money to my cause.  It is most welcome.  As the wealth of the EU migrates to the US markets bidding up prices thereby increasing my new worth, I am most grateful.   I am also grateful for the EU housing so many "refugees" that the USSA leadership created and has such will bare the financial and societal cost.  Again thank you..

VD's picture

& that "growth" only takes place as direct function of those that benefited from the stimulus; ie the 0.01%.

g'kar's picture

"€18 In QE Generated Just €1 In GDP Growth"

 

The €18 went where it was intended, into certain pockets.

Captain Chlamydia's picture

Your last line covers it all. 250+!

g'kar's picture

"certain pockets" is where all QE goes...In the EU or the USSA

piliage's picture

Great! Europe's fixed! Fabulous. Let's watch the EU build an army.

FORWARD SOVIET!!

bonin006's picture

Looks like they need to change the calculation of GDP

Vageling's picture

Yeah they added buttfucking their serfs to the list as well. Only to find out they've been doing it since the start. The 1 € is because some asked for lube. And since it's not PC to add migrant child prostitution to it they kind of overestimated themselfs. 

Urban Redneck's picture

They do, but for other reasons.

More importantly, this is an excellent example for disproving the core tenants of the dismal science of establishment macro economics and monetary theory.

If you believe the bullshit artists, then an EUR18 increase in the money supply yielding 1 EUR in GDP growth would imply a velocity of money somewhere between jack and shit. So where's the hoarding? Excess reserves on bank balance sheets are NOT hoarding, except by an intellectual stretch, that any banker woud laugh at. Banks are willing to lend, and ghetto dwellers with craptastic credit scores can buy cars for basically no money down and interest rates that only a AAA corporate or sovereign should be able to get in properly functioning credit markets.

It would probably help if economists actually looked at the mathematical formula for the velocity of money, instead of the misleading to downright incorrect textual definitions, but as long as bigger fools are willing to feed and clothe them...

brain_glitch's picture

Give them eurocrats a promotion!

pods's picture

That is crush depth implosion.  

Wait until DB implodes, they will have to QE till their asholes bleed to keep up with the debt collapse.

Not gonna happen though.  Black hole imminent.

pods

Cognitive Dissonance's picture

We are presently balanced on the event horizon. This is where life quickly gets exciting.

CuttingEdge's picture

I think you are right - all the geopolitical news is getting batshit crazy.

Only question is whether they can keep the markets afloat till after Trump is elected, because that is probably the optimum target for triggering the inevitable. Shove the blame on him for the past 8 years of depression and disappear quietly stage left.

 

Temporalist's picture

Catastrofucked is a better word than 'embarassed'

GreatUncle's picture

I just piss myself laughing now ... you should not be printing money if you do not have the size of real economy to service it.

So far the ECB on its grand design like all other countries have yet to figure out you are fucked if the size of your real economy does not keep up.

It really is that simple, you can inflate = CTRL-P but only if you have an economy that can honor the debt.

piliage's picture

And you can bet your ass the ECB is kneeling to the great juju for a Douche Bank Default for them to park QE in Germany, as opposed to the current strategy of drinking raw sewerage and buying junk bonds.

I hope they all die of syphilis.

Pieter Bruegel the Elder's picture

My quess is that one % is just fake data so it would likely be 600 versus 0.

nmb's picture

New liquidity is going straight to the banking mafia parasites, as always. There, mystery solved.

nope-1004's picture

Typical result for a "governing council" that was neither elected nor requested. A world run by bankers and accountants ends in bankruptcy and disaster every time.

Mallus Darkblade's picture

This should be alarming considering QE only helps the people at the very top of the food chain.

wow thats crazy's picture

Am I wrong here!

One they are not assets, they are worthless debts nobody wants!

Second how is buying other corp. and peoples worthless debts going to create GDP!

cause if you buy up my worthless ( assets )debts and liabilities do you really think I am going out and spend money!

Fuck no, I am glad I don't owe and more money

nra2708's picture

So how much did $18 generate in US growth?...allowing for the fact that this blog has already disparaged the official data ad infinitum???

Dr. Darkpool's picture

"We came here to seek intelligent life--ooops we make a mistake." -- Robin Williams.

undercover brother's picture

Why is this an embarrassment?  After all, everyone knows this is exactly how politics and politicians work, which is ALWAYS exactly opposite of how it should work.  

Vageling's picture

ECB serving us Europeans...? You funny man with your rhetorical question. Does anything that has two to three letters starting with E serve Europeans? Of course not. Pasta clown at it's best again. Now get those paws out of my pocket you worthless thieving Eurocrats! There! Look some lobbyist that wants to preform his oral trick on you. And fuck the European Crime Bank.

adonisdemilo's picture

When are Europeans' going to wake up to the fact that the ECB and the European Commission are just a bunch of totally incompetent chancers.

They rake in millions in wages, benefits and pensions and I wouldn't pay ANY of them with old rusty washers. 

niemand's picture

danke, für nichts.

 

 

 

 

Mr. Bones's picture

Obviously the problem is that it wasn't big enough.  /Krugman.

john milton's picture

OT, but someone pls explain to me that what does germany have that italy lacks in this deutsche bank paschi saga (other than power).. if taxpayer money is not an option... ???  feels like one have atom bomb and the other thermo one.. germans must have some option i dont see.. merger.. well two roosters wont make a hawk..

white horse's picture

But, if they print 4 more trillions it would solve all the problems in the world.

MoonSun's picture

I would say, it is because money was not exactly "printed". It is not helicopter money. It is money created out of thin air, true, but it must be paid back at near zero interest rate.

The important data woud be the relationship between public deficit and increase of GDP. 

Sparehead's picture

So it was a Krugmanious success! Moar!

bada boom's picture

I wonder where all the QE money has gone to? /s

venturen's picture

but look at the great stock market ralley those suckers brought for the very richest.....guess who has to pay back the trillions they wasted. No some criminal running an HFT in Chicago!

THE DORK OF CORK's picture

A Increase in prices. 

Not net income.

Results in poverty of course.

SpanishGoop's picture

I automatically read the first part with an Italian accent and it fitted.

 

hooligan2009's picture

this is completely bass ackwards and falls into the same trap that monetary economists fall into.

16 euros did not create 1 euro

16 euros caused 5 euros that would otherwise have occurred to turn into 1 euro by diluting the value of 5 euros into 1 euro (same applies to 1 dollar and 1 yen).

central banks destroy value by monetizing government deficits - politicians that engage in the activity of borrowing money with no intention of paying it back - I.E. STEALING

anything that a central bank does, and ever has done, has the opposite of the stated intent - the actual intent is to prevent people finding out how large the debt run up by golbal governments is - these debt are made up of lying, cheating and stealing by politicians that tax payers elect - only to be defrauded of their futures.

 

THE DORK OF CORK's picture

I suspect approx half ~ finds it's way into the European car credit nexus.

This manages to keep the price of oil inflated for Shell and other global combines. 

THE DORK OF CORK's picture

10 million ~ new cars registered in Eu ( minus Uk) in 2015.

At 20,000 each......????

 

Massive growth in 2016..,,

Add to that massive growth of commercial vehicles.

It pretty much covers it.

moneybots's picture
"ECB Embarrassment: €18 In QE Generated Just €1 In GDP Growth"

 

Law of diminishing returns. 

THE DORK OF CORK's picture

More like the law of depreciation..... 

It's a capital goods hyperinflation

This forces basic and crude rationing on the unfortunate population.

Infield_Fly's picture

The continent of dog fuckers and their entitlements is really paying off.

 

How about another 8 weeks of vacation and sa-more 2 hour lunches??

 

Europe has raped Africa and the Mid-East for decades to mask their bloated pile of shit socialist economy and existence.

 

Hear that???  Fat lady has already warmed up and is ready to go!!!

rphb's picture

This is nothing, just wait until future QE generates negative growth, because remember the 1€ growth pr 16€ QE is despite the program not because of it.

debtor of last resort's picture

When 'things' go up exponentially, the moment you can hardly see it anymore comes closer by the year, month, week.

itstippy's picture

They are printing in order to paper over insolvencies, not to boost GDP.  

GDP was boosted to wildly unrealist levels during the great credit bubble of 1997-2007.  The financial crisis of 2008 ended the credit bubble's lifeblood of AAA-rated crap debt security sausages and credit default swap gumbo.  Quantitative Easing by the central banks kicked in to keep the bubble inflated, but it can't make it grow bigger.  

End QE and ZIRP/NIRP and the world's combined GDP plummets.  These central bank "extraordinary measures" aren't stimulous, they're life support.