Jan 26

- Get Ready For Negative Interest Rates In The US (ZeroHedge, Jan 24, 2015):

With Fed mouthpiece Jon Hilsenrath warning - in no lesser status-quo narrative-deliverer than The Wall Street Journal - that The ECB’s actions (and pre-emptive collapse in the EUR) means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad, potentially slowing both U.S. growth and inflation; and Treasury Secretary Lew coming out his crypt to mention “unfair FX moves,” it appears The Fed (and powers that be) are worrying about King Dollar. This suggests, as Mises Canada’s Patrick Barron predicts, the Fed will start charging negative interest rates on bank reserve accounts as the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing “aggregate demand”. If savers won’t spend their money, the government will take it from them.

As The Wall Street Journal explains,

The European Central Bank’s launch of an aggressive program this week to buy more than €1 trillion in bonds poses important tests for the U.S. economy and the Federal Reserve.

Europe’s new program of money printing—and the resulting fall in the euro—means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad. Continue reading »

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Jan 25

mario-draghi
ECB president Mario Draghi is presented with the Prussian spiked helment at Bild’s offices

- Bunch of Criminals! (The Automatic Earth, Jan 23, 2015):

I was going to start out saying Thursday was the saddest day in Europe in 50 years, or something like that, because of the insane and completely nonsensical largesse the ECB permits itself to launch, aimed at once again saving a banking system, but which will not only not help the European people, it will make things even much worse than they already are.

I’ve said many times that the EU in its present form should be dismantled tomorrow morning (even though it’s not the same tomorrow morning anymore), and if Draghi’s $1.1 million x million ‘stimulus’ should make anything clear, it’s that the dismantling gets more urgent by the day. Continue reading »

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Jan 25

Bazooka man Draghi, taking aim at the euro

- Bouncing Rubble (Alhambra Investment Partners, Jan 23, 2015):

The Keynesian revival that is currently underway in the backrooms and hallways of assorted world governments is being somewhat replicated in Europe this week. It is all predicated on the position that all previous forms of “stimulus” from the fiscal side were not the right size, composition or color for that matter and thus the lack of recovery can be attributed to the impurity of the Keynesian solutions. That is further augmented in especially the Krugman view of “austerity” which has supposedly undercut all the good deeds done by central banks.

Thursday’s press conference with Mario Draghi announcing the QE program ran dangerously into interfering with that Krugman view, while also keeping within the spirit of the “purity” argument. Toward the end of the question and answer session, the ECB’s chief was asked about hyperinflation, as if this latest balance sheet expansion might nudge Europe closer to Weimar. Continue reading »

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Jan 24

Bazooka man Draghi, taking aim at the euro

- The Lunatics Are Running the Asylum: Draghi’s Money Printing Bazooka (Acting-Man, Jan 22, 2015):

Conclusion:

Given that already surging money supply growth rates in the euro area are now bound to increase at an even stronger rate, economic activity as measured by aggregate statistics is bound to pick up eventually. It is always important to keep in mind though that quantitatively measurable “activity” as such is not telling us anything about its quality. The boom prior to the 2008 crisis was also characterized by a measurable increase in “activity”, but as it turned out, most of it was merely a complete waste of scarce capital.

There is no reason to assume that this time will be different. These boom-bust sequences will continue until the economy is structurally undermined to such an extent that monetary intervention cannot even create the illusory prosperity of a capital-consuming boom anymore.

The bankers applauding Draghi’s actions today will come to rue them tomorrow.

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Jan 24

- Mario Draghi: Charlatan Of The Apparatchiks (David Stockman’s Contra Corner, Jan 22, 2015):

Well, he finally launched “whatever it takes” and that marks an inflection point. Mario Draghi has just proved that the servile apparatchiks who run the world’s major central banks will stop at nothing to appease the truculent gamblers they have unleashed in the casino. And that means there will eventually be a monumental crash landing because the bubble beneficiaries are now commanding the bubble makers.

There is not one rational reason why the ECB should be purchasing $1.24 trillion of existing sovereign bonds and other debt securities during the next 18 months. Forget all the ritual incantation emanating from the central bankers about fighting deflation and stimulating growth. The ECB has launched into a massive bond buying campaign for the sole purpose of redeeming Mario Draghi’s utterly foolish promise to make speculators stupendously rich by the simple act of buying now (and on huge repo leverage, too) what he guaranteed the ECB would be buying latter.

So today’s program amounts to a giant bailout in the form of a big fat central bank “bid” designed to prop up prices in the immense parking lot of French, Italian, Spanish, Portuguese etc. debt that has been accumulated by hedge funds, prop traders and other rank speculators since mid-2012. Never before have so few—-perhaps several thousand banks and funds—-been pleasured with so many hundreds of billions of ill-gotten gain. Robin Hood is spinning madly in his grave.

Continue reading »

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Jan 23

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Jan 23

- What ECB QE Will Do For The World (In 1 Word & 1 Simple Chart) (ZeroHedge, Jan 22, 2015):

Nothing…

  • *DRAGHI SAYS TODAY’S MEASURES WILL BE EFFECTIVE
  • *DRAGHI SAYS TODAY’S MEASURES WILL BOLSTER INFLATION
  • *DRAGHI CITES SIGNALING EFFECT ON INFLATION EXPECTATIONS

Signal This!!

20150122_ECBQE

“Different this time?” or “Einsteinian Insanity”?

With The ECB set to announce a QE4EVA-esque bond-buying initiative within the next hour or two, we thought it worth looking at just what The Fed’s balance-sheet experiment did for inflation expectations (the key narrative that is driving Draghi’s decision) and economic growth (what every politician is demanding Draghi help with)…

The answer… Nothing!!

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Jan 22

Super Mario The Magician
Source


Mario-Draghi-Just-Evil

- Mario Draghi Unveils €60 Billion Per Month QE Through September 2016 With Partial Risk-Sharing: Live Conference Webcast (ZeroHedge, Jan 22, 2015):

From “whatever it takes” to OMT to “discussing” bond purchases, with European interest rates at record (incomprehensible) lows (apart from Greece) and EURUSD at 11-year lows (down 25 handles in the last 8 months), Mario Draghi looks set to unleash interventionist ‘hell’ on the investing public in Europe with EUR50 billion (plus plus) of ECB QE per month for as long as it takes.

Priced-in?

20150122_ECB

And then there’s this:

  • *MERKEL SAYS DEBT CRISIS ‘MORE OR LESS UNDER CONTROL,’ NOT OVER
  • *MERKEL SAYS ECB IS MAKING AN INDEPENDENT DECISION TODAY

Live Feed below (in case of error, here is a link to the source webcast): Continue reading »

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Jan 21

- S&P Surges As ECB’s QE Leaked: Board Proposes €50 Billion In Bond Monetization Per Month (ZeroHedge, Jan 21, 2015):

And so with less than 24 hours to go, the ECB has decided to leak its deliberations not only to Merkel and Hollande, but Dow Jones. To wit:

DJ: ECB EXEC BOARD’S QE PROPOSAL CALLS FOR ROUGHLY EUR50B IN BOND BUYS A MONTH –  SOURCES
ECB SAID TO PROPOSE QE OF 50 BILLION EUROS A MONTH THROUGH 2016

More as we see it, but if indeed this will be a program without risk-mutualization and conditional and limited burden-sharing, where the hope was that Draghi would “shock and awe” the world with the size of the bond purchasing program instead, €600 billion per year looks decidedly on the low side of any “surprise” announcement where the whisper number was for €1 trillion per year, and if indeed this is the final formulation may result in a substantial disappointment for stocks after the initial kneejerk reaction.

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Jan 21

Related info:

- ECB’s Axel Weber: Bailouts Have Damaged Basis Of Euro Zone

Yes, but look who’s talking:

Bundesbank President Axel Weber has dished out €338 billion!!!

- Bankrupting Germany: German Bundesbank Financed ECB and National Central Banks With €338 Billion, ifo-Institute President Prof. Hans-Werner Sinn Stunned


euro-coin-cash

- EU has squandered last chance to make euro workable, warns Ex-Bundesbank chief (Telegraph, Jan 21, 2015):

Axel Weber says it is “hard to say” whether Europe would be in better shape today if the euro had never been launched, a tactful evasion understood as nostalgia for the stability of the D-Mark

The former head of the German Bundesbank has warned that the European Central Bank (ECB) will not succeed in raising inflation for years to come and is almost powerless to revive the fortunes of the eurozone on its own.

Axel Weber, now chairman of UBS and widely-regarded as Europe’s most influential private banker, said Europe’s leaders had squandered the chance to rebuild the eurozone’s foundations when the going was good and markets were calm. Continue reading »

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Jan 18

From the article:

“And we are also finally glad that with every passing day more and more banks, pundits and “straight to CNBC” experts wearing business suits realize what we said 6 years ago, namely that QE will never work as one can’t fix a failed financial system due to record debt problem with more debt and even more props to support an even more failed financial system. And that QE has, is, and will continue failing… for everyone but the 1% of course, who with every passing day continue to tempt not only fate but the guillotines as well. Reference? See the French Revolution, because it is never different this time.”


Mario-Draghi-Just-Evil

- The ECB Will Fail Given The “History Lessons Of US And Japan”, Warns Deutsche Bank (ZeroHedge, Jan 18, 2015):

Recall that the stated purpose behind the reason why Mario Draghi’s ECB is about to launch a European government debt monetization program ranging between EUR500 and 1000 billion is to halt deflation, spark credit creation and rekindle inflation. Alas, if that is indeed the case, then as Deutsche Bank said has already determined apriori, it will be a failure. Here’s why from the biggest German bank.

First, a broad strokes preview of what the world’s most confused Central bank will do this week: Continue reading »

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Jan 03

- 5Y German Bond Yield Goes Negative For First Time Ever (ZeroHedge, Jan 2, 2015):

How do you say Japanization in German? 5Y German bonds just traded at -0.1bp yield (below Japan’s 3bp 5Y yield)…

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Dec 22

- Don’t Tell Germany Draghi Is About To Monetize 90% Of Bund Issuance (ZeroHedge, Dec 22, 2014):

The Bank of Japan’s expansion of record stimulus today may see it buy every new bond the government issues.

The BOJ said it plans to buy 8 trillion to 12 trillion yen ($108 billion) of Japanese government bonds per month under stepped-up stimulus it announced today. That gives Governor Haruhiko Kuroda leeway to soak up the 10 trillion yen in new bonds that the Ministry of Finance sells in the market each month.

Translated: the BOJ will monetize 100% of all Japanese debt issuance (source).

… And this:

in Q1, we expect the ECB to announce a EUR500bn sovereign QE program and buy EMU government bonds according to each EMU country’s ECB capital key contribution. This implies that the ECB would purchase EUR130bn of German bonds, i.e., 90% of the 2015 gross issuance of German Bunds.

Translated: the ECB will monetize 90% of all German debt issuance (source).

Or just show them this chart. Continue reading »

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Dec 04

Related info:

- PIMCO Paid Bill Gross & Mohamed El-Erian Over $500 MILLION Dollars In 2013 Bonuses


It’s All Coming To An End, Bill Gross Warns (ZeroHedge, Dec 4, 2014):

Say what you want about Bill Gross, but the legendary bond investor is absolutely spot on in the following paragraph from his latest, December, investment outlook:

How could they? How could policymakers have allowed so much debt to be created in the first place, and then failed to regulate their own system accordingly? How could they have thought that money printing and debt creation could create wealth instead of just more and more debt? How could fiscal authorities have stood by and attempted to balance budgets as opposed to borrowing cheaply and investing the proceeds in infrastructure and innovation? It has been a nursery rhyme experience for sure, but more than likely without a fairytale ending.

Here is the full letter (link): Continue reading »

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Nov 15

- Italy’s Grillo Rages “We Are Not At War With ISIS Or Russia, We Are At War With The ECB” (ZeroHedge, Nov 14,  2014):

Next week, Italy’s Beppe Grillo – the leader of the Italian Five Star Movement – will start collecting signatures with the aim of getting a referendum in Italy on leaving the euro “as soon as possible,” just as was done in 1989. As Grillo tells The BBC in this brief but stunning clip, “we will leave the Euro and bring down this system of bankers, of scum.” With two-thirds of Parliament apparently behind the plan, Grillo exclaims “we are dying, we need a Plan B to this Europe that has become a nightmare –  and we are implementing it,” raging that “we are not at war with ISIS or Russia! We are at war with the European Central Bank,” that has stripped us of our sovereignty.

 

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Nov 03

- WHeN MoNeY DiES… (ZeroHedge, Nov 2, 2014):

Japan - When Money Dies

ECB- When Money Dies1

Fed - When Money Dies

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Oct 31

- The Wrath of Draghi: First German Bank Hits Savers with ‘Negative Interest Rates’ (Wolf Street, Oct 30, 2014):

Deutsche Skatbank, a division of VR-Bank Altenburger Land, which was founded in 1859, is not the biggest bank in Germany, but it’s the first bank to confirm what German savers have been dreading for a while: the wrath of Draghi.

Retail and business customers with over €500,000 on deposit as of November 1 will earn a “negative interest rate” of 0.25%. In less euphemistic terms, they have to pay 0.25% per annum to the bank for the privilege of handing the bank their hard-earned money or their business cash. Continue reading »

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Oct 28

- When Stress Tests Fail – Italian Banks Are Collapsing (ZeroHedge, Oct 27, 2014):

Despite the ban on short-sales – which has never worked in the past to do anything but instil fear in traders’ holding long positions – Italian banks are in free-fall following the utter failure of Draghi’s stress tests to encourage confidence in the European banking system.

  • INTESA, UBI, UNICREDIT, MONTE PASCHI SUSPENDED IN MILAN, LIMIT DOWN

Given the post-“whatever-it-takes” world of domestic sovereign bond-buying, it is no surprise that Italian govvie risk is jumping higher and the FTSEMIB is plunging.

“A relief rally would not be justified,” said Michael Woischneck, a portfolio manager at Lampe Asset Management in Dusseldorf, Germany. “There are still a lot of problems to fix, and Italian banks still have a lot of work to do. Even for the banks that passed, what is there to be relieved about? They still have to find a business model and figure out how to get unanswered questions that a stress test just cannot answer.”

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Oct 27

One can’t make this up:

The scenario of deflation is not there because indeed we don’t consider that deflation is going to happen.”
- Vítor Constâncio, Vice-President of the ECB


- The Chart That Crushes All Credibility Of The ECB’s Latest Stress Test (ZeroHedge, Oct 26, 2014):

While we would be the last to comment on the ECB’s laughable forecasting capabilities, we do have to note that there is a bit of a disconnect between the ECB’s projections of Eurozone inflation for 2014, 2015 and 2016 as presented in its March, June and September meetings

ECB inflation forecast history

… and what the market is currently anticipating based on 5Y5Y forwards which as we noted two weeks ago, recently hit an all time low.

20141009_infl

The reason we bring this up, is because just after the latest “most serious, most confidence inspiring” stress test was revealed, that perpetual troublemaker, the head of Germany’s IFO Institute, Hans-Werner Sinn, who relentlessly refuses to drink the European Kool Aid, pointed out something rather stunning. According to Bloomberg, in an emailed statement, Sinn said that “ECB avoided modelling a deflation scenario for southern Europe which explains why the capital shortfall was so small for many banks.” Continue reading »

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Oct 27

- ECB Announces Stress Test Results: Here Are The 25 Banks That Failed (ZeroHedge, Oct 26, 2014):

As was leaked on Friday, when the market surged on news that some 25 banks would fail the ECB’s third stress test (because in the New Normal more bank failures means more bailouts, means the richer get richest, means more wealth inequality), so moments ago the ECB reported that, indeed, some 25 banks failed the European Central Bank’s third attempt at collective confidence building and redrawing of a reality in which there is about €1 trillion in European NPLs, also known as the stress test.

The ECB’s results as summarized by the central bank: Continue reading »

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