ECB Watch

[BoyRacer]

How the Euro was (Really) Saved - Doug Noland -> prudentbear.com/2014/05/how- … saved.html

“To the astonishment of almost everyone in the room, Angela Merkel began to cry. ‘Das ist nicht fair.’ That is not fair, the German chancellor said angrily, tears welling in her eyes. ‘Ich bringe mich nicht selbst um.’ I am not going to commit suicide. For those who witnessed the breakdown in a small conference room in the French seaside resort of Cannes, it was shocking enough to watch Europe’s most powerful and emotionally controlled leader brought to tears. But the scene was even more remarkable, those present said, for the two objects of her ire: the man sitting next to her, French President Nicolas Sarkozy, and the other across the table, US President Barack Obama. It would be the low point in a brutal, recrimination-filled night, one many participants would recall as the nadir of the three-year eurozone crisis. Mr Sarkozy had hoped his leadership of the Group of 20 summit would cement his standing on the global stage en route to re-election. Instead, everything was falling apart. Greece was imploding politically; Italy, a country too big to bail out, appeared just days away from being cut off from global financial markets; and Ms Merkel, try as Mr Sarkozy and Mr Obama might, could not be convinced to increase German contributions to the eurozone’s ‘firewall’ – the ‘big bazooka’ or ‘all of money’ they believed had to grow dramatically to fend off attacks by panicking bond traders.”

“It Was the Point Where the Eurozone Could have Exploded,” read the headline for the first of Peter Spiegel’s terrific six-part Financial Times series “How the Euro was Saved.”

there is more

Reliving the euro’s most crucial moments with Peter Spiegel - -> ekathimerini.com/4dcgi/_w_ar … 014_539972

How the Euro Was Saved - -> ft.com/intl/indepth/how-euro-was-saved

How the euro was saved - -> ft.com/cms/s/0/f6f4d6b4-ca2e … abdc0.html

In the first of a series on the year that forever changed Europe, Peter Spiegel recreates the three days in November when the eurozone crisis hit its lowest point

Inside Europe’s Plan Z - -> ft.com/cms/s/0/0ac1306e-d508 … abdc0.html

How the euro was saved: In the second instalment of a series on the year that changed Europe, Peter Spiegel reveals how a secret strategy was developed to contain the firestorm from a Greek exit.

‘If the euro falls, Europe falls’ - -> ft.com/cms/s/0/b4e2e140-d9c3 … abdc0.html

How the euro was saved: In the third part of a series, Peter Spiegel examines Angela Merkel’s deft political moves that led to the end of the crisis

Eurozone now needs to win the peace - -> ft.com/cms/s/0/cb25be10-dc3d … abdc0.html alternate]

The acute phase of the crisis is over but underlying weaknesses remain, says Peter Spiegel

Podcast: A conversation with Peter Spiegel - -> podcast.ft.com/pop_up_player.php?pid=2188

In a special episode of the Analysis podcast, the FT’s Brussels bureau chief talks about his four-part series on the eurozone crisis, and answers a selection of reader questions from Greece, Lebanon, the Netherlands and the US

[fungus]

FT: ECB to tackle deflation threat with rate cut on Thursday

google.ie/search?hl=en&gl=u … ff&tbm=nws

Most analysts expect a cut of 10 or 15 basis points to the ECB’s main refinancing rate, now 0.25 per cent, to be matched by a cut to its deposit rate, which stands at zero. A move into negative territory in effect imposes a levy on reserves held at the ECB – a change that policy makers hope will spur lending from banks in the region’s core to those in the periphery, as well as weakening the euro.

[Daniel_Plainview]

insanity - in the Einstein measure of the word

ECB should directly fund infrastructure in nations with excessive output gaps - and tell the Germans to stick it.

i.e ECB could purchase bonds of European Investment Bank which would have remit for wide, large scale, infrastructure developments across periphery
this is version of QE but would actually work – unlike the US version which is an asset swap and works by placebo on asset prices.

[yoganmahew]

insanity - in the Einstein measure of the word

ECB should directly fund infrastructure in nations with excessive output gaps - and tell the Germans to stick it.

i.e ECB could purchase bonds of European Investment Bank which would have remit for wide, large scale, infrastructure developments across periphery
this is version of QE but would actually work – unlike the US version which is an asset swap and works by placebo on asset prices.

Absolutely. It would also, on the political side, help patch up the euro project, show Europe is doing stuff, and put funding behind some of the directives that come out of the EU (e.g. on water quality, carbon reduction etc.). Germany shouldn’t be too worried as much of the ‘equipment’ would likely have benefits for the German economy.

[Daniel_Plainview]

Germany shouldn’t be too worried as much of the ‘equipment’ would likely have benefits for the German economy.

BUT ZE INFLATION YOGAN ZEEEEEEE INFLATION IZ COMING CANT YOU ZEE IT!!!

[fungus]

insanity - in the Einstein measure of the word

ECB should directly fund infrastructure in nations with excessive output gaps - and tell the Germans to stick it.

i.e ECB could purchase bonds of European Investment Bank which would have remit for wide, large scale, infrastructure developments across periphery
this is version of QE but would actually work – unlike the US version which is an asset swap and works by placebo on asset prices.

Conventional monetary policy, i.e. rate cuts, definitely matter.

Conventional policy should be fully exhausted before the ECB embark on targeted SME LTRO and thereafter targeted QE.

Slower German inflation seen raising pressure on ECB to act

reuters.com/article/2014/06/ … sinessNews

Annual inflation in Europe’s largest economy likely slowed in May, data from German states suggested on Monday, probably pushing down the broader euro zone rate and raising pressure on the European Central Bank to act when it meets this week.

[Daniel_Plainview]

Conventional monetary policy, i.e. rate cuts, definitely matter.

Conventional policy should be fully exhausted before the ECB embark on targeted SME LTRO and thereafter targeted QE.

I understand why they think they work. They’re just wrong. Wrong diagnosis, wrong treatment, likely even wrong paradigm.

Just amazed that the masses haven’t cottoned on to it yet.

[TheJackal]

ECB rate cut near certain as manufacturing figures slip

independent.ie/business/worl … 23308.html

[slasher]

ECB cuts deposit rate below zero - FT.com on.ft.com/SwZUjR via @FT

The ECB cut its main refinancing rate to 0.15 per cent, from 0.25 per cent, and its deposit rate from zero to -0.10 per cent, becoming the first major central bank to venture into negative territory.

EUR USD down to 1.3560 odd

[TheJackal]

ECB Rate cut to 0.15%

independent.ie/business/iris … 32053.html

[slasher]

ECB Rate cut to 0.15%

independent.ie/business/iris … 32053.html

a historic move to negative deposit rates and Charlie and the gang focus on the delight for mortgage holders.

[TheJackal]

Is a measly 0.10% drop really going to do much?

[Terra_Incognita]

Not to the individual but presumably it helps banks who’s loans books are not full of trackers.

[slasher]

Is a measly 0.10% drop really going to do much?

Going to stop sterilization of SMP (repos) too-> more cash into system

[jake76]

Is a measly 0.10% drop really going to do much?

It’s a 40% drop

[Rimbaud]

Bad news for SVR customers.

[polaris]

When you’ve only one bullet left you’ve gotta start cutting it in half!

[polaris]

Double post

[TheJackal]

Not to the individual but presumably it helps banks who’s loans books are not full of trackers.

Aren’t they all full of trackers in Ireland?

[Daniel_Plainview]

all in all, only certainty is this will drag sovereign yields lower; and risk assets get bid as yield comparison more in their favour - i.e the discount rate drops
[e.g apartment in Dublin bringing in 25k p/a in rent; yield comparison is [i]now 2.5% for Irish 10yr, that was 3% not two months ago; 5.5% yield on that apartment gives price of €455k - but chop 50 basis points off that and you’re at, what, €500k.]

Big macro question is: will the subsequent divergence between US yields and Euro yields be enough to get the Specs shorting the € in large enough size to counter the constant €’s bought due to the persistent trade surplus. If so then weaker € is economic positive (for eurozone, negative for everybody else). If not, then € strengthens again - thanks to relentless trade surplus.