Members of the "EU assembly" ( in fact a bunch of retards ) have been chastised for
revealing details of a confidential briefing with ECB president, Mario Draghi.
Mr Draghi was taking part in a hearing organised by the EU assembly's economic
and monetary affairs committee on the future of the euro and plans to build a
so-called banking union. Jean-Paul Gauzes, a French member of the panel,
commented that Mr Draghi had told the committee that he was comfortable with the
central bank buying bonds with maturities up to about three years. Members had
their knuckles rapped over leaking their briefing, with the committee chairman
Sharon Bowles saying the leaks were “a complete breach of confidence". "I think
it has brought this house into disrepute,” she added.
Bloomberg reported: While it had originally been intended that
Draghi’s hearing with lawmakers would be public, that plan was changed because
of the convention that senior ECB officials don't comment publicly on policy in
the week before an ECB Governing Council meeting, according to a parliament
spokesman.
Moodys have downgraded 28 Spanish banks recently to just above junk status,
also downgrading several Italian banks because of the contagion effect.The whole
of Europe is utterly screwed by a debt mountain that cant ever possibly be paid
off....Unless the ECB can magic up another 500 billion in a vain attempt to stop
Spain and Italy going down the tube. ... We have politicians across the EU
without a backbone between them, clenching their buttocks as hard as possible to
not be the first to publicly shit themselves in panic. Yet the EU keeps a triple
A credit rating. That sounds like a ponzi scheme to me...
7 comments:
Stock markets soared on both sides of the Atlantic on Thursday after Mario Draghi, the president of the European Central Bank, unveiled a plan to save the euro by buying up the bonds of distressed eurozone countries such as Spain and Italy in unlimited quantities.
Draghi secured agreement for the scheme, known as "outright monetary transactions" (OMT), against fierce objections from the Bundesbank, in a rare defeat for Germany in eurozone policymaking.
The Bundesbank later issued a statement condemning the proposal as "tantamount to financing governments by printing banknotes". Draghi admitted there had been one dissenter at yesterday's meeting of the ECB's governing council, widely thought to be the Bundesbank's Jens Weidmann.
Financial markets welcomed the emergency plan. The FTSE100 jumped by more than 2%, and the Dow Jones was up 1.8% by lunchtime in New York. The ECB boss insisted the euro would not be allowed to fall apart: "We say that the euro is irreversible. So unfounded fears of reversibility are just what they are - unfounded fears".
This will go down like a lead balloon in Germany - Have you noticed that every inept scheme they've tried these past few years has been the thing that'll save the Euro, then turns out to be yet another band-aid. They may convince the markets, but nobody else. We've heard it all before.
"ECB chief secures agreement for 'outright monetary transactions' scheme despite German opposition"
A step in the right direction for the Euro.
Now all they to do is:
1. Re-regulate the bankers so they cannot lend and lend and lend and lend to those who have borrowed and borrowed and borrowed.
2. Tax banker trades - they got the Euro, the US and US, into this mess, they should pay back QE at least.
3. Restructure the Greek, Italian and Spanish economies so that they can make use of the power of the Euro rather than just using it to prop up debt.
4. In the UK now QE has reached £400 billion. Instead of prosecuting the majority, as the worst government since world war II is doing here, they should be taking the money back from the rich who are not paying their taxes - so that is no. 4. Tax the rich and close off access to tax havens.
As America settles in for a three month long across-all-media screening of Dumb and Dumber, Europeans are setting up for a valiant effort to put up an even more mind-boggling spectacle. Competition is healthy, right? The world of finance hangs on ex-Goldman Sachs vice chairman and managing director Mario Draghi's lips almost as much as it sucks up to Ben Bernanke's Jackson Hole. Central bankers become ever more important simply because in the absence of honest profits they are the only source of money left standing. If you can't make it, fake it.
That this money will need to be paid for at some point in time doesn't seem to be a concern for anyone anymore, or at least it's not addressed. As far as politicians, bankers and media are concerned, it could come from somewhere anywhere they don't care. They're all convinced they won't be the ones who have to foot the bill, and the way things are going they're probably right.
Draghi and Bernanke have been anointed with the power to dole out trillions of dollars and euros more, and they'll hand it to whoever's bought the best seats in the house, claiming straight-faced that it's the only way to save the US, the eurozone, the economy and the planet itself.
Since nothing serious is to be expected from the US while the election circus is in town and no-one can seemingly get enough of the fake trapeze acts on the menu, well, unless a real hurricane or a real war blows the cheaters and liars out of their tents, we might as well focus on Europe, that other Goldman Sachs subsidiary.
Right wing career civil servant and present Spanish PM Mariano Rajoy, along with Italian career technocrat and non-elected PM Mario Monti, are attempting to bully the rest of Europe into bailing out their failed economies and banks. And on the surface this may sort of seem to work. But they are, if you look closer, trying to juggle and keep in the air far too many outsize hot potatoes at the same time.
Of course, they are trying at the same same time to solve this issue by, with Draghi's approval, throwing as many of these big hot potatoes as they can into the hands of Angela Merkel, the German Parliament and other EU political bigwigs whose deficits have yet to be exposed.
"1. Re-regulate the bankers so they cannot lend and lend and lend and lend to those who have borrowed and borrowed and borrowed."
Because removing access to credit will almost certainly help economic recovery?
"2. Tax banker trades - they got the Euro, the US and US, into this mess, they should pay back QE at least."
Because making it harder to execute transactions across currency borders will help economic recovery? Or perhaps making hedging your long-contract commodity purchases with a futures contract to minimise your risk much harder to do will encourage commodity prices and hence the costs of manufacturing to fall?
The bankers, after all, can and will leave. But the rest of us will have to stay here and pay all those transaction costs. Hurray, the bankers will leave... goodbye, good riddance and so on and on. But of course, they'll leave and hence they won't be paying those taxes, so not only will we have the costs to our economies, we won't gain anything either.
"3. Restructure the Greek, Italian and Spanish economies so that they can make use of the power of the Euro rather than just using it to prop up debt."
That was the plan a while back. It's apparently neoliberal and evil to ask the greek government to live within the means of the greek people. So they haven't done it. They didn't do when they were asked to do it before joining the euro, they didn't do it when it would have been a good idea in the early days of the euro, they didn't do it when the recession arrived and it was obvious they'd need to. Oh, and they haven't done it now despite several times of asking by the ECB. Why... do you suddenly think they will do it when asked again?
That is likely to mean tough budget targets and a list of radical economic reform measures, similar to those imposed on bailed-out Greece, Ireland and Portugal.
Smokescreen afrter smokesscreen. we all know nothing has been imposed on Greece, the government is still resisting real reforms and has hardly sacked anyone.
Do they take people for fools? Or assume the bond dealers all over the world have so many fires to fight they cannot see the reality, which is in the detail?
List, yeah let's all wave lists. Like the one that listed all the companies in Greece who had not paid their tax. Trouble was many of them were declared insolent already. No tax man in the world can get unpaid taxes off a company that is already insolvent, it means there is no moneyl eft in the co. nada, nothing. So why produce a list with these names on it?
Not a Skeptic, Just a Realist
Draghi Still Isn’t Winning Over Skeptics – MarketBeat – WSJ.
If you offer an opinion outside the mainstream, you are labeled a skeptic. A better term would be realist, because the mainstream is very optimistic regarding Europe. Optimistic people label those who do not share their optimism as either pessimistic or skeptical.
This bond buying program changes nothing. Europe is in the midst of a funding crunch and desperately need foreigners from outside Europe to purchase its bonds, particularly those of the PIIGS. Due to the risk of insolvency, investors are demanding higher premiums for PIIGS debt.
Interest charges are a component of national budgets so a country affected by higher rates can either raise more money through tax increase, cut spending on social programs or borrow more money. These are not exclusive choices; a government could choose a blend of these options, too.
What people do not realize is that there is no magical fourth option. Let’s discuss why that is so.
The bond buying plan looks like that fourth option, but it will eventually cause one or more of the three options I outlined above to occur, just in the richer countries supporting the poorer ones.
There is no such thing as free money. When the ECB begins purchasing bonds, it will be withdrawing an equal amount of euros from the financial system. It will also insist on the failing countries enacting “reforms,” which will lead to shrinking economies in these countries. See Greece for an example of what happens during austerity.
The ECB will purchase bonds on the open market, mostly from banks. Then, they will turn around and sell these banks the bills from the ECB to mop up this liquidity. The result is that the amount of money available for lending has not changed.
Remember those austerity conditions? Well, they will reduce tax revenues, which means that the struggling countries will have to sell even more bonds to finance themselves. Increasing the supply of these bonds while holding demand levels consistent will have the affect of lowering bond prices or raising the interest rate. This will lead to more purchases by the ECB. This will also cause the bonds that the ECB already owns to decrease in value.
The ECB is owned by the countries of the EU. If it loses value, then the taxpayers of the EU are on the hook for these losses. The rich countries will have to increase their contributions to the ECB, and they will have to cut their own budgets, raise taxes or increase borrowing to pay for this.
Even though nothing changes in the long-term, in the short-term the ECB has bought some more time. Unfortunately, using the Greek situation as a guide, this time will not be used wisely.
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