There’s not a single day that we’re not treated to more smart treats about stimulus measures. Are they necessary, are they good, are they bad, who profits from them. It gets really long in the tooth. Today, former ECB head Trichet says unlimited stimulus ‘risks’ blowing bubbles. “Supplying unlimited amounts of liquidity at interest rates close to zero has “unintended counterproductive consequences.” No shit, assclown. Does Jean-Claude really mean to claim he just figured that one out now? Why else did he never say it before? There are 1001 other wise guys like Trichet who’ve only recently seen a sliver of light, and see fit to make the great unwashed party to their new found wisdom.
Overview of the ECB meeting and likely outcomes. More robust analysis than ideological fervor.
Rising rates would hurt bonds and equities but would support gold. This was clearly seen in the 1970s when rising interest rates corresponded with rising gold prices. Gold becomes vulnerable towards the end of an interest rate tightening cycle when there are positive real interest rates and savers earn something on their deposits.
A dispassionate look at what the ECB announced last week and the potential implications
When The Head Of The European Central Bank Lies To Zero Hedge On The Record: Presenting Europe's "Plan Z"Submitted by Tyler Durden on 05/15/2014 15:16 -0400
We are happy to report that Zero Hedge is the first media outlet that Mario Draghi has very publicly, officially, and on the record, lied to. Because as we learned overnight, Europe most certainly had a "plan in place so that the markets don't basically collapse." Only it wasn't as Margio Draghi called it, Plan B. It was a different letter of the alphabet. Thanks to the FT's Peter Spiegel we now know that just over a year ago, in order to preserve the myth that Europe's power echelons are so "confident" with the Eurozone staying together they did not even consider a break up as a potential outcome, Draghi explicitly and on the record lied.
Presenting Europe's Plan Z.
What is the Bundesbank thinking?
Despite record levels of unemployment across Europe (most specifically among the youth), record high (and surging) levels of loan delinquencies, and collapsing credit creation, the leaders of the EU continue to peddle their own brand of dis-information and willful blindness. While UKIP's Nigel Farage tongue-lashings are normally enough, EU's Barroso this morning unleashed the following:
*EU'S BARROSO SAYS ECONOMIC GROWTH 'SLOWLY RETURNING'; SAYS EU AT TURNING POINT IN CRISIS
However, as the following chart of earnings estimated for European firms shows, there is absolutely none, zero, nada sign on a 'turning point' and, as we have noted previously, unless the EUR weakens significantly, Europe will rapidly dip back into re-re-recession once again.
Despite record unemployment, record loan delinquencies, and record low loan creation, Mario Draghi and his merry European men decided now was not the time to cut rates to "help" the real economy. Of course, with peripheral bond and stock markets exploding higher why would he - Europe's 'problems' are solved if the market is to be believed. Of course the ECB press conference will have its smattering of negative rate discussions, QE teases, and OMT confidence-inspiration but the multi-year highs in EUR will continue to hurt Europe's exporters means he'll have to try sometime to jawbone it down.
... we learned what the difference between $85 billion and $75 billion is in the grand scheme of things. Or, in case we haven’t, here is a chart showing just how “vast” the impact of today’s announcement will be on the Fed’s balance sheet at December 31, 2014 when instead of printing well over $5 trillion at its old monetization pace, the Fed’s balance sheet will be only $4.9 trillion.
An interesting overview of Germany's attempt to solidify its hegemony in Europe.
This is our first out of four series where we look at all the various bail-out schemes concocted by Eurocrats.
Today we look at how the ECB has evolved since 2007. In the next three posts we will look at the Target2 system, various fiscal transfer mechanisms and last, but not least the emergence of a full banking union.
It was bound to happen some might say. We were warned! Chinese banks have stopped lending due to pressure from liquidity deposits. Some branches of the Bank of China and the Industrial and Commercial Bank of China have issued statements in which they announce that they are halting lending for a temporary period.
The Financial Times has revealed that Italy is facing losses of €8 billion due to derivative contracts that were taken out in the 1990s and that were restructured during the Eurozone crisis.
Jean-Claude Trichet, the former head of the European Central Bank, in an interview with CNBC stated that there was only so much that central banks could do to save the economic situation at the present time.
The $13 billion bailout in Cyprus is small (in 2011, France and Germany made $80 billion of loans and grants to developing countries) and as JPMorgan's CIO, Michael Cembalest, notes the situation is in many ways unique. However, he warns, the latest melodrama reinforces the inconsistent and chaotic nature of EU policy-making. Bondholders, equity investors, bank depositors and citizens of Europe are at risk of unpredictable outcomes as they play Eurozone Roulette. Here’s where they might land on any given spin...