The European Central Bank is in "panic" over the eurozone crisis and acting
outside its mandate with its new bond-buying plans, the bank's former chief
economist said in comments published Saturday. "The break came in 2010. Until
then everything went well," Juergen Stark, the German who resigned from the ECB
in late 2011 after criticising its earlier round of buying up of sovereign debt,
told Austrian daily Die Presse in an
interview. "Then the ECB began to take on a new role, to fall
into panic. It gave in to outside pressure ... pressure from outside Europe."
Mr Stark said the ECB's new plan to buy up unlimited amounts of eurozone states'
bonds, announced on September 6, on the secondary market to bring down their
borrowing rates was misguided. "Together with other central banks, the ECB is
flooding the market, posing the question not only about how the ECB will get its
money back, but also how the excess liquidity created can be absorbed globally,"
Mr Stark said. "It can't be solved by pressing a button. If the global economy
stabilises, the potential for inflation has grown enormously." He added that
"panic" about the eurozone breaking up was "nonsense" but that the only way to
end the crisis was for member states to bring down their debts and implement
structural reforms to boost economic growth. "Governments have recognised that
returning to budgetary discipline is indispensable. Markets focus much more on
whether states will be able to service their debts in five years' time," he
said. Mr Stark quit in late 2011, following in the footsteps of former
Bundesbank head Axel Weber, who stepped down earlier in the year from Germany's
central bank because of unease about the ECB's policies. Mr Weber's successor
Jens Weidmann was the only member of the ECB's policy-setting governing council
to vote against the bank's new programme earlier this month. "Weidmann's
arguments ... should not be made light of," Mr Stark told Die Presse.
"The way in which his position has been publicly commented upon by the ECB
leadership has crossed the line of fairness." Source: AFP 
Access Investments-Building Awareness - European Union-ROMANIA
Sunday, September 23, 2012
The European Central Bank is in "panic" over the eurozone crisis and acting
outside its mandate with its new bond-buying plans, the bank's former chief
economist said in comments published Saturday. "The break came in 2010. Until
then everything went well," Juergen Stark, the German who resigned from the ECB
in late 2011 after criticising its earlier round of buying up of sovereign debt,
told Austrian daily Die Presse in an
interview. "Then the ECB began to take on a new role, to fall
into panic. It gave in to outside pressure ... pressure from outside Europe."
Mr Stark said the ECB's new plan to buy up unlimited amounts of eurozone states'
bonds, announced on September 6, on the secondary market to bring down their
borrowing rates was misguided. "Together with other central banks, the ECB is
flooding the market, posing the question not only about how the ECB will get its
money back, but also how the excess liquidity created can be absorbed globally,"
Mr Stark said. "It can't be solved by pressing a button. If the global economy
stabilises, the potential for inflation has grown enormously." He added that
"panic" about the eurozone breaking up was "nonsense" but that the only way to
end the crisis was for member states to bring down their debts and implement
structural reforms to boost economic growth. "Governments have recognised that
returning to budgetary discipline is indispensable. Markets focus much more on
whether states will be able to service their debts in five years' time," he
said. Mr Stark quit in late 2011, following in the footsteps of former
Bundesbank head Axel Weber, who stepped down earlier in the year from Germany's
central bank because of unease about the ECB's policies. Mr Weber's successor
Jens Weidmann was the only member of the ECB's policy-setting governing council
to vote against the bank's new programme earlier this month. "Weidmann's
arguments ... should not be made light of," Mr Stark told Die Presse.
"The way in which his position has been publicly commented upon by the ECB
leadership has crossed the line of fairness." Source: AFP 
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2 comments:
The EU is dead in the water already, the Euro and Eurozone even more so. Or perhaps you think the whole mad caboodle is a roaring success, and on an ever-upwards curve? Who cares when it finally unravels - it will, by its nature, never be a success in the future, because its structure and aims are stuck in the past in a fast-changing world. UKIP were top in the EU elections, and have gained significant success in the polls ever since the last General Election, so much so that they are challenging the Limp Dicks for third place. Most Conservatives agree privately with UKIP, and significant numbers have deserted to UKIP, so much so that the Conservatives cannot possibly win the next General Election without UKIP aid or without adopting UKIP policies in a significant fashion. There's a message for you there, chum. There is a great irony here that the steps taken in order to prevent a deflationary collapse could mean there is an even greater "danger" if we do start to recover. Put simply, the debt burden of the major economies are so large that they cannot afford to pay higher rates. The central banks, have massive rate risk through the bonds they are holding. What we are trying to do is create via financial alchemy a solution to the problem that the debtors cannot pay the creditors, but a restructuring is politically impossible as well as a mortal threat to undercapitalized banks. Therefore, we hope that we can somehow flood the world with liquidity, to inflate only specific assets (property, equities) but not others (food and energy). Because this is "unnatural" we see efforts made to manipulate markets (officially sanctioned fudges of housing data, outright equity market intervention, and rumors of oil releases) so the markets just get weirder every day. The question is, whether we are happy to live in a world of extreme central planning, which seems to benefit the ultra wealthy the most or would be prefer to stop the charade, allow the markets to clear, accept the reality that we are not as rich as we thought, but move on.
It's not just the ECB that's in panic, it's just about every central banking institution in the world. They really don't know what to do other than create more debt to service the unserviceable debt that they have created.
For decades, it has been easier to make money out of money than to make money out of providing goods and services.
We need to go back to fundamentals where businessmen and industrialists call the shots, and bankers and politicians and lawyers and accountants and all the other flunkeys do as they are told.
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