Full Text Of Trichet Speech Following Today's Monthly Monetary Policy Meeting Of ECB's Governing Council

Regarding our collateral framework, the Governing Council has decided to keep the minimum credit threshold for marketable and non-marketable assets in the Eurosystem collateral framework at investment-grade level (i.e. BBB-/Baa3) beyond the end of 2010, except in the case of asset-backed securities (ABSs). In addition, the Governing Council has decided to apply, as of 1 January 2011, a schedule of graduated valuation haircuts to the assets rated in the BBB+ to BBB- range (or equivalent). This graduated haircut schedule will replace the uniform haircut add-on of 5% that is currently applied to these assets. The detailed haircut schedule will be based on a number of parameters which are specified in the press release to be published after todays press conference.

So Much For ECB Prudence: Trichet To Continue Accepting Crap Collateral After 2010

The ECB is finally realizing that Greece will be a major issue for years if not decades to come. Which is why Jean-Claude Trichet finally put the debate of whether his bank will accept BBB- rated collateral beyond 2010 to rest. The answer is yes. This also takes out Moody's ridiculous A2 Greek rating out of the equation: finally Moody's can vote with its conscience. "It is the intention of the ECB's Governing Council to keep the minimum credit threshold in the collateral framework at investment grade level (BBB-) beyond the end of 2010. In parallel, we would introduce, as of January 2011, a graded haircut schedule, which will continue to adequately protect the Eurosystem." Considering how well the Eurosystem has been protected to date, we can't wait to see just how well this experiment will play out.

Jean-Claude Trichet Makes A Moody's Downgrade Of Greece Irrelevant, Says ECB Will Ease Collateral Rules In That Case

Presented is the full text of speech by ECB head Jean-Claude Trichet before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels. While the speech itself has nothing new to say, further entrenching the bubble mentality of the Bernanke Put, some of the comments by JCT in the Q&A are rather relevant, namely that the ECB will once again look at the "collateral issue" of government bonds. Just in case Moody's grows a conscience, here is how the ECB will deal with it: "The European Central Bank does not expect Greek government bonds to be downgraded again, but if they are it might have to reconsider its plan to revert back to pre-crisis collateral rules at the end of this year." This is amusing because earlier today Alphaville posted a research note by UniCredit which shows just how increasingly impaired by "rubbish" the collateral provided by European banks to the ECB has become. This is inline with extended disclosures provided on Zero Hedge about how our own Fed has recently allowed total crap to be lent against in both its discount window and the Primary Dealer Credit Facility. Another amusing soundbite: "High government bond spreads don't justify emergency loans." Oh, so the CDS speculators won't be summarily executed after all, even despite all the disclosure by BaFin and everyone else that CDS speculators had no impact whatsoever on blowing up bond spreads? What an anticlimactic development.

* Bundesbank President Axel "I'm German, That's All You Need Know" Weber
* Portugal's Central Bank Governor Vitor "Policy Wonk" Constancio
* Italy's Mario "What the Hell Are You Laughing at?" Draghi
* Greece's George "But, I've Been in The Lion's Den" Provopoulos
* There's Going to be a Euro Next Year?

G-7 To Discuss Greece This Weekend, Even As Trichet Watches The Superbowl

Quotes from Germany's Finance Minister:

G-7 To Discuss Greece, Portugal On Sidelines

Crisis Not Yet Fully Over

Market Moves Exaggerated But Must Be Taken Seriously

Euro Is And Will Remain Stable

Will Not Spare Greece From Efforts To Reduce Deficit

Europe Isn't Only Place With Budget Problems

EU Commission Will Enforce Tough Demands On Greece

Trichet's Turnaround

Just as it appeared that the wheels were about to come off, stocks, euro, gold, and oil were all u-turned late in the day. No doubt, somebody spotted Trichet heading into a massage parlor, providing traders with a heads up that a possible intervention was in order.

IMF Prepared To Bail Out Greece As Trichet Warns Of Debt Unsustainability (In Europe AND US)

Not good for Europe: all the posturing about how Greece will never, ever be bailed out was just destroyed courtesy of a few words out of place by the IMF. IMF Managing Director John Lipsky just noted that the International Monetary Fund is ready to help Greece "in any way necessary." The quote comes from a Bloomberg TV interview conducted earlier.Perhaps that is why Greek CDS just hit another all time wide at 410 (+35). And joining the foot in the mouth crew is ECB president Trichet who said that "Debt on both sides of the Atlantic are unsustainable." So should we now assume that even Central Bankers admit we are headed for a brick wall at 120 mph?

ECB's Jean-Claude Trichet Interview With Focus Magazine

FOCUS: Do you consider this independence to be a great advantage? The Chairman of the Federal Reserve was appointed by the President – and the Senate is currently deciding whether Ben Bernanke can have a second term in office.

Trichet: It is of key importance that the ECB’s independence is guaranteed by an international treaty and not just by national law. National laws can be adopted, but they can also be overturned again.

A Comparison Of Liquidity Expansion Efforts In The Eurozone And The US - Implications For The Euro-Dollar Trade

With the vast majority of analysts focusing on American monetary expansion, few if any seem to be looking at what the monetary situation is in the Eurozone. Alternatively, looking at relative strength of the dollar vs the euro, one may suggest that aggressive monetary expansion is the only factor that needs to be addressed. Some highlights of European monetary aggregates confirms just that (especially when juxtaposed with American counterparts), and present several questions: i) when will Europe catch up with the US in expanding various monetary bases, and ii) what will happen to the EUR once the ECB realizes that it needs to recreate the Bernanke Moral Hazard Doctrine and start expanding monetary circulation to the same extent as the Federal Reserve already has?

Daily Highlights: 10.9.09

  • Asian stock markets rose Friday on US gains, with resource and energy stocks leading.
  • Bernanke says Fed ready to tighten monetary policy when economy improves.
  • Dollar rises for first time in 5 days after Bernanke says Fed ready to 'tighten' policy.
  • Initial Jobless claims in US decrease 33,000 to 10-month low of 521,000.
  • Japan Machine Orders increased 0.5% in August, rebounding from record low.
  • Treasuries decline, set for weekly drop, after Bernanke signals tightening.

Medley On The Real Dollar Story

"The Europeans are getting worried. As the euro flirts with the $1.50 level not seen since mid-2008, the Eurozone's economic and monetary authorities are mulling their first unequivocal verbal protest against the currency's appreciation in five years. Why now? Because Eurozone officials have lost trust in the commitment of US President Barack Obama's administration to the "strong dollar" policy. This loss of trust has reached a point where some even suspect the US has reached an accommodation with the Chinese whereby Beijing turns a blind eye to dollar depreciation in return for a moratorium on Washington's public calls for renminbi appreciation." - MGA