As A Reminder, Here Is What Happened To Risk Following The Surge In Fed Discount Window Borrowings
Since for all intents and purposes the ECB's LTRO is equivalent (and likely accepts even 'looser' collateral) to the Fed's massive (for its time) liquidity injection following the failure of Lehman, a good question is what happened to stocks after the Discount Window usage spiked back in the fall of 2008. Spoiler alert: nothing good.
Needless to say, Goldman, which obviously recommended the actions at both the Fed and the ECB courtesy of its employees at both locations, is well aware that such discount window expansions are clearly temporary in nature, and the next and final inevitable step, is all out unsterilized liquidity injections via Large Scale Asset Purchases, aka QE.
So just how long until the bond vigilantes push Draghi to this inevitable next inflation ushering move?