Just Say Nein - Bundesbank On European QE: "Abandon The Idea Once And For All"

Tyler Durden's picture

While it will hardly come as a surprise to many that after making it abundantly clear that Germany is in total disagreement with ECB monetary policies, culminating in the departure of Jurgen Stark from the European central printing authority, Germany will not permit irresponsible, Bernanke-esque monetary policies, it probably should be noted that even following the most recent escalation of adverse developments in Europe, which are now on the verge of unwinding the entire Eurozone and with it the affiliated fake currency, that the German central bank just said that any European QE could only come over its dead body. Today channeling the inscription to the gates of hell from Dante's inferno is none other than yet another Bundesbank board member, Carl-Ludwig Thiele, who said that "Europe must abandon the idea that printing money, or quantitative easing, can be used to address the euro zone debt crisis...One idea should be brushed aside once and for all - namely the idea of printing the required money. Because that would threaten the most important foundation for a stable currency: the independence of a price stability orientated central bank."

In other words, the best Europe can hope for is massive liquidity provisioning as has been the case in recent months, when the ECB's balance sheet has soared by almost $1 trillion in 6 months (perhaps someone should ask the Bundesbank just what they think of that). However, for that to happen, banks have to continue to be on the brink, even more than now one could add, which simply means that the ECB will reactively provide liquidity to insolvent banks (at cheap rates) which will immediately turn around and redeposit the cash back at the ECB, but unlike the US, will not inject the monetary system with unsterilized cash. Which means one thing: Bernanke is and will continue to be stuck as the only source of marginal "Austrian" cash (i.e., market moving) in the world, and once the current episode of EUR-hatred passes, and it will, the revulsion will once again turn to where the next imminent money printing episode will come from - the 3rd subbasement of the Marriner Eccles building.

Reuters explains why the Bundesbank Just Said Nein:

Thiele called for euro zone countries to exercise fiscal discipline and said that boosting the resources of Europe's rescue funds would buy time to address the bloc's debt woes.

 

"But lasting confidence cannot be bought with money alone," he added in the text of a speech for delivery in Hamburg.

Thiele said the ECB's decision in May 2010 to buy Greek sovereign bond was a breach of a ban on monetary state financing in the euro zone.

 

He added that he believed the ECB's decision last August to extend its bond-purchase programme to Italy and Spain was driven by a majority view on the ECB Governing Council that the cost of borrowing was too high for the Italian and Spanish governments.

 

Bundesbank President Jens Weidmann also opposes the ECB's bond-buying programme, which he feels takes the central bank into the real of fiscal policy.

 

However, ECB figures released earlier on Monday showed the central bank more than trippled its bond purchases last week to the highest level since late November, spending 3.77 billion euros as a calm start to the New Year gave way to an intensification of the euro zone debt crisis.

And yet the market still continues to be convinced that the ECB will print in the conventional sense, "just because."