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Mario Draghi Is Becoming Germany's Most Hated Man

Tyler Durden's picture





 

Back in September, before the transition from then ECB head J.C. Trichet to current Goldman plant and uber printer Mario Draghi we asked whether "Trichet will disgrace his already discredited central banker career by pushing a rate cut before he is swept out of the corner office by Mario Draghi, or will the former Goldmanite Italian become the most hated man in Germany soon, after he proceeds to ease, even as Germany still experiences Chinese inflationary re-exports. The answer will be all too clear in just a few months." Sure enough, following a whopping €1 trillion in incremental liquidity released by the ECB in the three shorts months since Draghi's ascension on November 1, all under the guise that the ECB is not printing when it most certainly is, albeit "hidden" by the idiotic claim that it accepts collateral for said printing (what collateral - Italian and Spanish bonds, which will become worthless the second even more printing is required in a few short months? This is run time collateral that can be issued "just in time" to convert it to even more cash as UniCredit did again today), the answer is becoming clear. Slowly but surely the realization is dawning on Germany that while it was sleeping, perfectly confused by lies spoken in a soothing Italian accent that the ECB will not print, not only did Draghi reflate the ECB's balance sheet by an unprecedented amount in a very short time, in the process not only sending Brent in Euros to all time highs (wink, wink, inflation, as today's European CPI confirmed coming in at 2.7% or higher than estimated) but also putting the BUBA in jeopardy with nearly half a trillion in Eurosystem"receivables" which it will most likely never collect.

Reuters on how the revulsion toward the ECB head is slowly forming:

Some European Central Bank policymakers are alarmed that a dramatic loosening of lending policy stemming from a 1-trillion-euro wave of cash unleashed into the financial system will fuel imbalances in the euro zone and stoke inflationary pressures.

 

Led by Bundesbank chief Jens Weidmann, who was previously a top advisor to German Chancellor Angela Merkel, they are pushing for the central bank to think about an exit strategy after it fed banks 530 billion euros on Wednesday in the second of two cheap, ultra-long funding operations.

 

The signs of internal division add weight to what sources have already told Reuters: that the central bank does not intend to offer any more cheap three-year cash. The chances of interest rates dropping below their record low one percent also appear to be diminishing.

 

The huge take-up at Wednesday's so-called LTRO meant that in the space of two months the ECB has injected over a trillion euros into the financial system.

End result: EUR Brent is at a record again:

More:

Draghi can ill afford to ignore the ECB hawks' concerns.

 

Last year, two German heavyweights on the Governing Council quit in protest at the ECB's controversial programme to buy sovereign bonds - a measure they felt came too close to financing governments. Weidmann too opposes this option.

 

Some within the ECB have also lost on some key policy decisions last December - a cut in interest rates to a record low of 1 percent, and the loosening of the collateral rules.

 

The Bundesbank also pushed for a higher interest rate on the 3-year LTROs, but failed to convince other Council members.

 

Draghi only assumed the ECB presidency after Weidmann's predecessor, Axel Weber, quit early last year, clearing the way for the Italian to take the helm of the euro zone's most powerful institution despite the concerns of many in Germany.

 

The Italian risks a deep and damaging split on the Council if he tests the hawks too far, weakening the ECB just a few months into his eight-year presidency.

But, but, it's all in the name of perpetuating the ponzi. Forget that it is the Germans who are paying the bill.

Draghi is already at odds with some powerful voices in Germany, taking a nonchalant view last month about the TARGET2 imbalances.

 

The Bundesbank considers the TARGET2 imbalances a symptom of underlying problems in the currency bloc and is watching them with increasing concern as they reflect a stronger reliance of banks in weaker euro zone countries on cheap ECB funding and growing risks on those countries' central banks balance sheets.

 

If the euro zone breaks up - which few expect - the larger national central banks in the 17-country bloc would be left with a greater share of the potential losses, as they contribute a greater share of the ECB capital.

 

Hans-Werner Sinn, president of Germany's influential Ifo think-tank, has argued that stronger countries such are financing the deficit extravaganzas of Greece, Portugal and Ireland via the euro zone cross-border payment system.

As noted, Germans are getting angry:

Against this backdrop, it is perhaps no coincidence that details of his letter to Draghi emerged in the Frankfurter Allgemeine Zeitung (FAZ) - a respected German daily.

 

In his letter, Weidmann called for a return to collateral rules as they had been before the crisis, the FAZ said.

 

Weidmann had already expressed concern that "too generous" supply of liquidity could create risky incentives for banks, which could in turn store up future inflation risks.

 

Ewald Nowotny, a member of the ECB's 23-man Governing Council, went further on Tuesday and said the bank should think about an exit strategy after its massive cash injections.

Funny - the Fed said it would think of an exit strategy two years ago. Now the EURUSD is pricing in at least $1 trillion in more QE by the Fed over the next few months. As is the stock market, as will crude, following a few margin hikes of course, when it hits $120+.

Luckily, the CPI ex-everything, is transitorily flat.

 


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Thu, 03/01/2012 - 14:50 | Link to Comment maxmad
maxmad's picture

Heil Draghi!

Thu, 03/01/2012 - 15:00 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Old-school leverage.

Thu, 03/01/2012 - 15:02 | Link to Comment battle axe
battle axe's picture

Euro  Helicopter Benny!!!!

Thu, 03/01/2012 - 15:28 | Link to Comment Winston Churchill
Winston Churchill's picture

More like a giant Zeppelin required !

Thu, 03/01/2012 - 15:05 | Link to Comment Nobody For President
Nobody For President's picture

Just finished reading "When Money Dies" = perfect picture!

Wheel me out another 1/2 trillion, Mario.

Thu, 03/01/2012 - 18:43 | Link to Comment pashley1411
pashley1411's picture

You laugh.   Try feeding that many bills in just for a cup of coffee.   

Thu, 03/01/2012 - 20:24 | Link to Comment Buck Johnson
Buck Johnson's picture

You hit it right on the head, and this is coming to the US in the near future just you wait and see.

Thu, 03/01/2012 - 16:30 | Link to Comment RossE9
RossE9's picture

my classmate's mother makes $84 an hour on the internet. She has been fired from work for nine months but last month her pay was $19551 just working on the internet for a few hours. Read more on this web site ..... http://goo.gl/skBIp

Thu, 03/01/2012 - 17:20 | Link to Comment battle axe
battle axe's picture

RossE9, That might be because that your classmate's mother takes it up the ass like your mom....

Thu, 03/01/2012 - 14:51 | Link to Comment Manthong
Manthong's picture

Wait till they see €5 per liter petrol.

Thu, 03/01/2012 - 15:04 | Link to Comment Azannoth
Azannoth's picture

That would only be a problem for the little people as 4 out of 5 of those euros would be direct/indirect taxes as all hail the welfare-state

Thu, 03/01/2012 - 14:53 | Link to Comment pendragon
pendragon's picture

you reap what you sow merkel. byebye sarkozy

Thu, 03/01/2012 - 14:53 | Link to Comment ballafun
ballafun's picture

Whole set of greedy people around, why blame Draghi alone!

Thu, 03/01/2012 - 14:54 | Link to Comment Gene Parmesan
Gene Parmesan's picture

They can hate him all they want, but without action it sadly doesn't mean a damn thing.

Thu, 03/01/2012 - 15:05 | Link to Comment Vince Clortho
Vince Clortho's picture

I think it is going to take hyper-inflation to get enough people into the streets,  that is, unless someone can figure out a faster trigger mechanism.

But it is definitely Central Banker Print Mania time.

Thu, 03/01/2012 - 14:56 | Link to Comment Undecided
Thu, 03/01/2012 - 14:57 | Link to Comment mayhem_korner
mayhem_korner's picture

 

 

This whole thing is gonna blow up someday...isn't it?

Thu, 03/01/2012 - 14:57 | Link to Comment AC_Doctor
AC_Doctor's picture

Wait till they see 2K gold!

Thu, 03/01/2012 - 14:57 | Link to Comment markar
markar's picture

Deutschland aussteigen!

Thu, 03/01/2012 - 14:58 | Link to Comment jm
jm's picture

Draghi is a force of nature that must be priced in.

Thu, 03/01/2012 - 15:02 | Link to Comment youngman
youngman's picture

It is kind of amazing that in just three months the ECB has done a complete 180......and can´t print fast enough.....I do love the lies though....."we are not printing"....lol....even though the 3 year time span will be interesting....I think it will be over before those loans will have to be repaid...hes got 3 trillion more before then....easy....

Thu, 03/01/2012 - 15:06 | Link to Comment Vince Clortho
Vince Clortho's picture

Providing liquidity.  Doesn't alarm the public when they use that term.

Thu, 03/01/2012 - 15:05 | Link to Comment undercover brother
undercover brother's picture

Big whatever on Draghi.  Barney Frank is still an ass clown.

Thu, 03/01/2012 - 15:05 | Link to Comment ziggy59
ziggy59's picture

Holy cannoli! Wonder when these bankster gangsters will be shown either rope, needle or sharp surgical steel 4 ft up?

Thu, 03/01/2012 - 15:05 | Link to Comment Dick Darlington
Dick Darlington's picture

Today's eurozone CPI number was the 15th in a row exceeding ECB's "zee price stabeeletee" mandate. Of course the true figures are much more higher but even with the massaged numbers this shows ECB has FAILED in it's main task. And btw, i'm still very disturbed how exponentially rising prices can be called "stable". I guess one needs a PhD to understand that.

Thu, 03/01/2012 - 15:10 | Link to Comment ziggy59
ziggy59's picture

Me too... Stable like Nitro

Thu, 03/01/2012 - 15:06 | Link to Comment JPM Hater001
JPM Hater001's picture

It's no use hyper-inflating the world if you dont have a few friends riding along with you.

Thu, 03/01/2012 - 15:49 | Link to Comment YesWeKahn
YesWeKahn's picture

Is Mario Draghi a member of mafia?

Thu, 03/01/2012 - 18:55 | Link to Comment Zero Govt
Zero Govt's picture

is the Pope a virgin?

Thu, 03/01/2012 - 15:55 | Link to Comment Schmuck Raker
Schmuck Raker's picture

As I understand it, the ECB doesn't even track TARGET2 imbalances. They leave it to the NCBs to worry about.

That is...not good.

Thu, 03/01/2012 - 15:58 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Unfortunately dear Angela has been screwed by Mario in a very decent way: making her believe that she has the political power but her wallet has been stolen by the ladrone Draghi, educated by GS. Bernanke has instructed his pupil MD how to do it, that in the end, EU is paying the bill. Well done! We do not have to look for the next nobel prize winner.

Thu, 03/01/2012 - 16:07 | Link to Comment flyonmywall
flyonmywall's picture

Can't wait to see the ending. Wonder if they will get each other in the end...

 

Thu, 03/01/2012 - 16:15 | Link to Comment Don Diego
Don Diego's picture

Germans will bitch but do nothing. 67 years of allied military occupation has emasculated the German people.

 

Deutschland, erwache!

Thu, 03/01/2012 - 17:01 | Link to Comment PontifexMaximus
PontifexMaximus's picture

Leider Tiefschlaf, la russata del secolo proprio!

Thu, 03/01/2012 - 16:17 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Never forget: Merkel is the rightmost option.  If she were to lose elections, her replacement would be an outright socialist who would sprint to the airplane to fly to the ECB and tell them to print all they want.  Merkel is the only thing slowing it down, and the best she can do is slow it down.

They can make this go on until that which cannot be printed -- oil -- crushes them via scarcity (not price).

 

Thu, 03/01/2012 - 16:17 | Link to Comment Nussi34
Nussi34's picture

Bomb the ECB!

Thu, 03/01/2012 - 16:17 | Link to Comment Nussi34
Nussi34's picture

and the fucking PIFGIS!

Thu, 03/01/2012 - 18:52 | Link to Comment Zero Govt
Zero Govt's picture

and the green lightbulb factories

Thu, 03/01/2012 - 16:29 | Link to Comment Solon the Destroyer
Solon the Destroyer's picture

http://www.cbsnews.com/8301-505144_162-57387655/inflation-not-as-low-as-you-think/

CBS News reports that EPI, or Everyday Price Index is now over 8% annually.

But really, who gives a flying fuck about the hundreds of millions of people on a budget when as a POTUS or Fed Chairman, budgets are little more than mere inconveniences. 

But thank god the Little Guy'nGal can stay ahead of this loss of spending power by simply buying some bonds or GICs. 

I think I should go open up a retirement fund just to see what the advisor would actually advise in light of this travesty.  Should be worth a laugh.

Thu, 03/01/2012 - 17:48 | Link to Comment dcb
dcb's picture

Tyler, your analysis is just plain wrong

1) The german guy who was going to be head of the ecb left and stopped running 9or the position. (WEBER? )

2) THE GERMAN HAWKS HAVE MAINLY LEFT THE ECB BOARD, DIDN'T ONE JUST LEAVE

3) DO YOU REALLY THINK THE GERMANS DID NOT KNOW WHAT TEY WERE GETTING INTO WHEN THEY APPINTED A GUY FROM GOLDMAN SACHS? THEY AREN'T STUPID.YOU DON'T APPOINT A GOLDMAN GUY AND EXPECT HE ISN'T GOING TO GIVE UNLIMITED SUPPORT, BAILOUT TO HIS FRIENDS AND PALS. IF HE HAD HONOR HE WOULDN'T HAVE LASTED THERE. iF i KNEW WHAT HE WAS GOING TO DO WHEN THE ANNOUNCEMENT OF HIS APPOINTMENT WAS MADE, YOU KNOW THEY DID AS WELL.

mY CNCLUSION: HE WOUOLD HAVE NOT BEEN ABLE TO BE THE HEAD WITHOUT GERMAN APPROVAL, GERMAN HAWKS (LOL) HAVE LEFT (THEY WOULD HAVE STAYED IF THE GOV'T REALLY WANTED THEM THERE TO BE A DISSENTING VOICE). HENCE THE GERMANS ARE SAYING ONE THING TO APPEASE THE POPULACE, BUT THE ELITES ARE DOING AND WANT TO DO SOMETHING ELSE ENTIRELY.

 

Thu, 03/01/2012 - 20:09 | Link to Comment Non Passaran
Non Passaran's picture

Why would anyone want to read that?
I guess "dcb" is short for "douchebag"!

Thu, 03/01/2012 - 21:52 | Link to Comment John Wilmot
John Wilmot's picture

Only douchebags WRITE IN ALL CAPS.

However, this douchebag is 100% on the money. There are no "hawks," there is no "dissent." These banking fuckers (and the govenrments they own) ALL play for the same team. The apparent divisions are for public consumption only.

Thu, 03/01/2012 - 18:23 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

as long as the SNB is supporting the EUR peg = this hooooey, who cares? 

not me, certainly!

the germans are abviously being played by the banksters

  • inflation
  • recession
  • debt payment/guarantees
  • everlasting conundrumZ

wait till theFrench calm down from all the recent bankstering excitement and see the sarko gravy train a-comin, too!

altho the other guy seems all-communist, all-the-time [like, right now], the last tango is with the slow burn, imo...

i don't see the banksters throwing sarko under the bus for a new entity who couldn't play the puppet role a bit better in his most glorious dreams!

the size of this criminal plan almost boggles my mind...

...but, not quite... 

gotta keep saying:  everything is screwed down tight, imo

damned thing i've ever seen on this scale!  this is why maintaining relative non-belligerent methods, overall, is also important to TPTB, right now:  if the funny-money thingie is working for a change, don't start launching clay pigeons on the "balance0'power" range, again, imo

i don't know if we can possibly get thru 2012 w/out a more intense financial crisis or a (near-) global oil military conflagration, but i would recommend i, if possible...

...personally

Thu, 03/01/2012 - 18:46 | Link to Comment Zero Govt
Zero Govt's picture

"Mario Draghi Is Becoming Germany's Most Hated Man"

Somone's got to be i suppose

Better a 'bloody foreigner' than the usual prime suspects of German bankers and politicos pissing away (again) their countries industrious wealth on the tragic juvinile idealism that is Euro Project

 

Thu, 03/01/2012 - 22:07 | Link to Comment zippy_uk
zippy_uk's picture

Tyler - there is absolutely no point in enslaving the Greek people unless you enslave the German tax payers allong with them. "NWO NOW!"

Fri, 03/02/2012 - 01:50 | Link to Comment cnhedge
cnhedge's picture

germany is releasing liquitidy in the TARGET system.

http://www.jinrongbaike.com/
http://www.cnhedge.com/

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