Should the ECB start massive QE, and will it do it? These have not been previously linked by me. If you like, I can edit and add stuff from previous posts and make this a "continually updated special".
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Strategic Briefing: The ECB's Last Stand? – The Capital Spectator
Several recent or classic summarized articles on ECB.
SocGen's Grice Joins Crowded ECB-Print-Demanders Citing 'He Who Devalues First, Wins' – ZH
A couple of weeks ago Merkel and Sarkozy bluntly asked Papandreou whether or not Greece wanted to remain in the euro. “Make your mind up” she said. But it's now time for the Germans to conduct some introspection of their own. They should make their mind up. What's more important: the euro or their hard money principles? My guess is the euro.
A couple of weeks ago Merkel and Sarkozy bluntly asked Papandreou whether or not Greece wanted to remain in the euro. “Make your mind up” she said. But it's now time for the Germans to conduct some introspection of their own. They should make their mind up. What's more important: the euro or their hard money principles? My guess is the euro.
Merkel Risks the European Union to Save ECB Credibility – View / BB
In the immediate term, honoring the spirit of the treaty as originally conceived risks tearing down the very thing the treaty was intended to build: Europe’s single currency. If the price of preserving the ECB’s credibility is to destroy the monetary union over which the ECB presides, what’s the point?
French can can versus German nein, nein, nein – The Big Picture
Germany will be more “susceptible” (whether openly or by repeating that the ECB is an independent organisation – more likely) to ECB involvement (whether additional bond buying/QE etc, etc), if Euro Zone countries pre agree to central fiscal oversight.
Equity Update: In the end monetisation is easier than structural reforms – tradingfloor.com
Despite all obstacles in terms of laws it is very likely that politicians, also those from Germany, will allow the ECB to conduct similar operations as the Fed did under the US financial meltdown in late 2008.
In for a penny, in for a pound, ECB guv’nor – alphaville / FT
Well, surely, over time, by buying up sovereign bonds in constant dribs and drabs, it adds up in practice to monetary financing, whether you’re capping purchases to €10bn or €20bn. So, the Bundesbank’s fear of being seen to be violating Article 123 of the EU Treaty (however justified, or not, you see this fear) is a bit odd.
Well, surely, over time, by buying up sovereign bonds in constant dribs and drabs, it adds up in practice to monetary financing, whether you’re capping purchases to €10bn or €20bn. So, the Bundesbank’s fear of being seen to be violating Article 123 of the EU Treaty (however justified, or not, you see this fear) is a bit odd.
Something for the bail-out skeptics – alphaville / FT
There must come a point when some bail-out sceptics ask whether the ECB is in fact not overstepping its remit and breaking treaty agreements by financing governments… market participants will constantly question both the banks willingness and its ability to continue intervening in markets and this reduces the effectiveness of the interventions.
It is getting scary that there is no way to tell if the market is really improving. The ECB has corrupted the price discovery process so much that no rally is believed… The guys who have been wrong, wrong again, wrong some more, wrong once again, are the ones who are saying that ECB monetization is the best solution. Why should we believe them? It seems a bit like making the kid in the corner with the dunce hat the teacher.
The euro crisis: A sense of surrealism – Free exchange / The Economist
There is a case to be made for keeping up the heat on countries such as Italy and Greece to extract badly-needed economic reforms. But investors are ever more likely to take Germany and the ECB at their word that they will not provide support on the scale needed to keep Italy afloat.
Will the euro be destroyed by ideologues? – Al jazeera
Dean Baker: The absurdity of this story is that such a collapse could be easily prevented. The recipe is simple. The ECB must agree to backdrop the debt of Italy and most of the other heavily indebted countries, after a write-down of Greek debt. It should also have an expansionary policy that allows somewhat higher inflation in Germany so that the peripheral countries can regain competitiveness by having lower positive inflation rates.
Bob Janjuah: "Germany Will Walk, And The S&P Will Undershoot To 700 In 2012" – ZH
Even if Germany and the ECB somehow agree to unlimited monetisation I believe it will do nothing to fix the insolvency and lack of growth in the eurozone. It will just result in a major destruction of the ECB's balance sheet which will force an ECB recap. At that point, I think Germany and its northern partners would walk away.
Even if Germany and the ECB somehow agree to unlimited monetisation I believe it will do nothing to fix the insolvency and lack of growth in the eurozone. It will just result in a major destruction of the ECB's balance sheet which will force an ECB recap. At that point, I think Germany and its northern partners would walk away.
An Open Letter to Dr Jens Weidmann – Charles Wyplosz / voxeu.org
The EZ crisis is approaching a tipping point beyond which market panic and slow government reaction threaten to create a generation-defining loss of jobs, savings, and pensions. This open letter to the president of the German central bank presents arguments that counter German objections to using the Eurozone’s last remaining defence against economic calamity – the ECB.
Is there enough solidarity in a Europe that no longer gets a free ride from the markets–in the form of cheap credit for everyone–to keep the euro-zone together, or is national self-interest a stronger motivator? – No.
BoA: We are all waiting for the catalyst to a better or worse market - to us this means that the markets are now waiting for the ECB to step in… While the relevant time horizon is highly uncertain it feels more like a matter of two weeks than two months.
Continuity, consistency and credibility – ECB
Speech by Mario Draghi at the 21st Frankfurt European Banking Congress “The Big Shift” on 18-Nov