It's lights-out for the world-renowned Dennis Gartman...
WE ARE IN DALLAS AND WE HAD A POWER FAILURE!!!
We are in Dallas this morning to speak before the Dallas Security Trader’s Association dinner this evening.
However, the Four Seasons Hotel has had a massive power failure and has caused us some very real problems, so TGL is not as we would wish it to be.
We have covered what we can and we are transmitting as we are able... the first time in our history even when brought low by hurricanes and the like. This was a problem far beyond our control.
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We can only assume that there are zombies roaming loose in Dallas as every Starbucks and McDonalds (with their free wifi and electricity outlets) were also dark... but then again, it is scary to venture from the confines of The Four Seasons
However, the world-renowned writer of things did have enough power to pen this drivel...
...make no mistake about it: the ECB has become expansionary and this is but the first step in its doing so.
Just as few, other than we, thought that the Fed would have QE 2 and QE 3 following the first round of QE, we suspect that few will argue that this first round of QE on the part of the ECB shall result in larger and more such operations in the future, but we do and we are.
That is what is important to understand here beyond minutia: this is the first shot across the monetary bow in Europe by the ECB and it shall not be the last.
Remember this statement in the days, weeks, months and perhaps even the years ahead. The ECB has, in the most common language, lost its monetary virginity and once lost it cannot ever be regained.
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So ignore negative rates, forget asset encumberance, dismiss transmission channels, and totally dump on any actual treaties - moar is coming from the ECB for sure apparently - just as everyoine has been waiting for the BoJ all year as their economy collapses... simply put the JGB market is entirely broken and the EGB market is heading rapidly in that direction... and central banks know it.
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Perhaps Mises Canada's Patrick Barron can help...
From Open Europe news summary of September 5, 2014:
ECB surprises markets with rate cut and purchases of private assets;
Ruparel: Pressure rises on eurozone governments as ECB nears end of its policy tools
The ECB yesterday surprised markets by cutting interest rates and announcing a programme to purchase private sector assets, in the form of asset-backed securities and covered bonds. In his press conference, ECB President Mario Draghi said that the decision was not unanimous, with reports suggesting Bundesbank President Jens Weidmann was opposed. Draghi reiterated his call for flexibility in fiscal policy across the eurozone, but warned that structural reforms must come first. In response to the move, the euro hit its lowest level for 14 months and equity markets across Europe hit their highest point for six years.
Here is a direct quote from the Maastricht Treaty:
1. Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments.
It is clear that the Maastricht Treaty, which created the European Central Bank, has been abrogated. It appears that Herr Weidmann, as president of the Bundesbank, opposes the ECB’s action, but what will he and the German government do? Will the Germans accept as legitimate what can only be described as an illegal action? The fate of the rule of law in Europe now rests in German hands.