• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

ECB Agrees On €20 Billion Weekly Upper Limit To Sovereign Bond Purchases

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Fri, 11/18/2011 - 08:53 | 1890808 misterc
misterc's picture

Wow, just 0.96 trillion € of monetization every year. Price stabeleteeeeee!

Fri, 11/18/2011 - 09:02 | 1890827 Great Unwashed
Great Unwashed's picture

20 bil./wk is quite a bit, no? The last failed Spanish auction only tried to raise 4 billion. The ECB could have bought the whole thing, and then done the same every day of the week.

Fri, 11/18/2011 - 09:22 | 1890867 junkyardjack
junkyardjack's picture

What I'm guessing is that there is a hell of a lot more debt that is already floating out there which is causing insanity with their yields so them covering the new issuances wouldn't help much.  But I'd be interested in hearing someone's explanation because it does seem like it would cover their new issuances so while it would be lipstick on a pig would it be enough to kick the crisis down the road a little bit longer.

Fri, 11/18/2011 - 09:38 | 1890908 Common Man
Common Man's picture

The 20 bil/wk limit (i.e. target) applies to ECB meddling in the primary and secondary markets. When you see the PIIGS + FAAArce yields soaring, its the ECB that jumps in to the rescue. This capacity to rescue now has an upper limit....thats the "comprehend the significance of this news" TD's talking about

CM

Fri, 11/18/2011 - 09:03 | 1890830 AngryGerman
AngryGerman's picture

6 weeks until Xmas, i.e. €120 billion to go. They can buy a lot of Greek, Portugese, Spanish, and Irish bonds with that. They cannot buy a lot of Italian debt with it. Good-bye.

Fri, 11/18/2011 - 09:10 | 1890845 OutLookingIn
OutLookingIn's picture

Okay. Let me see if I got this right. Bear with me now!

The ECB uses EU bonds it has purchased, with freashly minted Euros, from member countries as collateral. To issue new ECB bonds that it "lends" to the IMF so that the IMF may "lend" more money to EU countries who are insolvent, who sell more bonds back to the ECB so they can pretend that they are solvent?

I'm going back to bed. My head hurts!

Fri, 11/18/2011 - 09:50 | 1890939 topcallingtroll
topcallingtroll's picture

Good job sorting this all out, although your inappropriate use of a period threw me and messed up the meaning.

Keep your eye on the pea no matter how many times they shuffle the shells.

Fri, 11/18/2011 - 09:43 | 1890888 chrisina
chrisina's picture

20 bill./wk is more than enough to buy all new issues of PIIGS + F public debt:

 

PIIGS + F public debt = 5 Trill.

ave. maturity = 7 years = 364 weeks

 

ave. weekly issuance of PIIGS+F debt = 13.6 bill. 

 

as a matter of fact, they don't even need to purhcase any of that in order to maintain PIIGS + F sov. bonds rates capped : just send a credible signal that they stand ready to purchase those quantities if rates go above the cap. Signal they are sending now...

Fri, 11/18/2011 - 09:31 | 1890891 sampo
sampo's picture

So that's 1040 billion next year, eh?

Fri, 11/18/2011 - 09:51 | 1890944 topcallingtroll
topcallingtroll's picture

I think someone just rang the bell. Did you hear it?

Risk is so ON!

Fri, 11/18/2011 - 09:12 | 1890850 Eally Ucked
Eally Ucked's picture

They meet every 2 weeks to make new decisions.

Fri, 11/18/2011 - 09:18 | 1890862 Overflow-admin
Overflow-admin's picture

Sure, this 20 billion weekly cap is the end of the monetization scheme /sarcasm

Fri, 11/18/2011 - 08:53 | 1890809 GeneMarchbanks
GeneMarchbanks's picture

'We give the machines 15 minutes before they comprehend the significance of this news.'

It means we're in for a Merry Christmas this year doesn't it?


Fri, 11/18/2011 - 09:05 | 1890832 Mike2756
Mike2756's picture

yep, sanity clause has some oil revs to recycle into EU debt.

Fri, 11/18/2011 - 08:56 | 1890813 Paralympic Equity
Paralympic Equity's picture

There is also the unwritten cap at 7% yield for Italy 10Y

Fri, 11/18/2011 - 08:56 | 1890814 Cdad
Cdad's picture

Might take 20-30 minutes for the machines to realize the significance of the story, Tyler.  Some seriously dumb ass commodity traders are currently enjoying the joy joy, old rumor, complete farce bullshit bounce this morning, being bailed out on their momentum stupidity from yesterday again [and again and again].  Let's call it 25 minutes....mark...

Fri, 11/18/2011 - 08:57 | 1890815 transaccountin
transaccountin's picture

capitalism is long gone

Fri, 11/18/2011 - 09:29 | 1890883 ArkansasAngie
ArkansasAngie's picture

And it is time for us to exert moral hazard on those who perpetrated that policy.

 

Fri, 11/18/2011 - 09:54 | 1890955 topcallingtroll
topcallingtroll's picture

Moral Hazard?

I prefer to exert some Iron Maiden. Those poky things hurt more.

Fri, 11/18/2011 - 08:58 | 1890819 firstdivision
firstdivision's picture

Don't look now, but oil is back over $100, that's bullish for discretionary spending.

Fri, 11/18/2011 - 09:07 | 1890837 GeneMarchbanks
GeneMarchbanks's picture

People doin' a lot of driving today so... there's your causality.

Fri, 11/18/2011 - 09:11 | 1890848 repete
repete's picture

Price of Molotov Cocktails is going through the roof.

Fri, 11/18/2011 - 08:58 | 1890820 Ted Baker
Ted Baker's picture

THESE ARE THE NEO NAZIS (JENS WEIDMANN, JUERGEN STARK, YVES MERSCH, NETHERLANDS AND AUSTRIA) THAT THEY ARE DESTROYING THE EURO AREA AND CAN ULTIMATELY DESTROY THE ENTIRE WORLD...GET RID OF ALL THESE SUCKERS...

 

 

Fri, 11/18/2011 - 09:06 | 1890835 AngryGerman
AngryGerman's picture

ey, is that you bunga. you want my money bitch?

Fri, 11/18/2011 - 09:00 | 1890822 Carlyle Groupie
Carlyle Groupie's picture

Time to inject a Bird Flu variant into the population.

Fri, 11/18/2011 - 09:28 | 1890880 Josh Randall
Josh Randall's picture

I was kinda partial to SARS

Fri, 11/18/2011 - 09:01 | 1890825 bugs_
bugs_'s picture

20Bx52W=1T QE3 via Eurozone.

Fri, 11/18/2011 - 09:03 | 1890828 scatterbrains
scatterbrains's picture

benny/oblama buying spoo with money out of thin air but no worries they'll inflate those digits away, in fact one day after it's discovered what they did the U.S. will have made money on those trades..  half way to Weimar but still.. they are our future heros guys be nice.

Fri, 11/18/2011 - 09:06 | 1890834 css1971
css1971's picture

Sounds like a target more than a limit.

 

80 billion a month?

Fri, 11/18/2011 - 09:07 | 1890836 AngryGerman
AngryGerman's picture

brilliant. good one.

Fri, 11/18/2011 - 09:07 | 1890838 Dick Darlington
Dick Darlington's picture
Eurozone debt web: Who owes what to whom?

 

http://www.bbc.co.uk/news/business-15748696

Fri, 11/18/2011 - 09:12 | 1890851 GeneMarchbanks
GeneMarchbanks's picture

Wait a sec, the UK and US owe nothing to one another? You don't say.

Fri, 11/18/2011 - 09:08 | 1890840 repete
repete's picture

Would you fuck me for $1,000,000?

Yes.

How about $100

What do you think I am? A Whore?

We've already decided what you are, now we're negotiating the price!

Fri, 11/18/2011 - 09:10 | 1890844 Cult_of_Reason
Cult_of_Reason's picture

The stupid dog stock market (futures traders) chases every offer to celebrate Spanish 10-year yields (currently 6.8%) spiking above Italian yields (currently 6.6%)

Europe is fixed again!

Fri, 11/18/2011 - 09:14 | 1890854 scatterbrains
scatterbrains's picture

well it is Spain's turn to install a technocrat after all... need to exert a little pressure.

Fri, 11/18/2011 - 09:36 | 1890902 Cult_of_Reason
Cult_of_Reason's picture

A lot of bulls were positioned for a breakout and Santa Clause rally (~80% of the trading community).

Now they are in the trap and desperate for any rumor/news to bail them out.

Fri, 11/18/2011 - 09:52 | 1890945 Roy T
Roy T's picture

 

I saw some hedge fund manager on one of the channels with a recommendation to "play the Santa Claus rally by the book"

 

  Umm, ok.

Fri, 11/18/2011 - 09:11 | 1890846 BennyBoy
BennyBoy's picture

Why that's only 2.9 billion euros a day.

A monetization bargain!

Fri, 11/18/2011 - 09:12 | 1890852 Everybodys All ...
Everybodys All American's picture

The IMF is setting itself up to be the one world's Federal Reserve ... I wonder if everyone has figured this out by now.

Fri, 11/18/2011 - 09:16 | 1890858 AngryGerman
AngryGerman's picture

they need a purpose. they lost their original one with the end of bretton-woods. Nearly 40 years of preparing a world government, and now the time has come.

Fri, 11/18/2011 - 09:36 | 1890904 jcaz
jcaz's picture

Wow, hadn't thought of that until Steve Liesman blurted it out awhile ago.....  Next Stevie will come to the conclusion that the Fed may have to print if there is further decline in confidence....

Scintillating....

Fri, 11/18/2011 - 09:15 | 1890856 aleph0
aleph0's picture

 

 

 

Eurozone debt web: Who owes what to whom ?

http://www.bbc.co.uk/news/business-15748696

 

Debt is debt ...  even if it's Circular !

Net all the Debt, and the Bankster & Politicians are out of business !

.. which is why we have so much !

Fri, 11/18/2011 - 09:59 | 1890966 g speed
g speed's picture

its not the debt--its the interest!

Fri, 11/18/2011 - 09:15 | 1890857 max2205
max2205's picture

Sounds like a bad "Frankfurter"

Fri, 11/18/2011 - 09:18 | 1890861 chaartist
chaartist's picture

Who the fuck gave them this mandate, also national governments broke all laws that we now backstop other countries debts. Who the fuck they think they are. This is unbelievable. Germans please vote Merkel down asap and go to DEM, so we can all live with our own national currencies. 

Fri, 11/18/2011 - 09:23 | 1890868 Peter K
Peter K's picture

It took the Soviet Union 70 years to collapse. The Euroland Union woun't take that long:)

Fri, 11/18/2011 - 09:24 | 1890871 spanish inquisition
spanish inquisition's picture

I will guess everyone in Europe is scrambling to change their bond auctions to Mondays.

Fri, 11/18/2011 - 09:25 | 1890874 fourchan
fourchan's picture

ecb is going to force the screw job away from them and on to the usa. we are fucked.

Fri, 11/18/2011 - 09:25 | 1890875 bartek
bartek's picture

€1 trillion of printing per year. This is the end of Eurozone as Germany will leave.

The only way for Eurozone to stay intact is 0 monetization and 50-70% default across the board.

Fri, 11/18/2011 - 09:29 | 1890885 gatorengineer
gatorengineer's picture

This will send the markets up 4 or 5 percent today, Im big time short..... I am big time F'ed...............  A trillion a year solves all of the EU....... Print on Bitchez......... Germany is TOAST.........

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