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No ECB QE


spygirl

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Not needed anymore.

After a few years of turbulence, mainland Europe has settled down and everyones working away.

All thee Greeks have jobs and are paying tax.

France is going to work thru August, nose to grind stone all that.

Mario can have a break now. A job well done.

 

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I assume you mean this - https://www.bbc.co.uk/news/business-46552147

 

What impact does this have? Does it mean that the Eurozone will now start to raise interest rates, like the US have done after ending their buybacks? I'm unsure as to how similar the EU/US situation is in terms of the end of QE, but the respective economies seem very different and I'm not even sure how linked the interest rate raises are as part of QE. I know that ZIRP and QE are two different policies, but how interlinked are they? What impact does this have on Greece and Italy who I believe have had a lot of support from this programme? 

"The ECB isn't removing its support altogether; it will reinvest existing QE money once bonds mature."

This was taken from the So-Called BBC article. Does this make it different from the US unwind? I think the US are just allowing the bonds to roll over when they mature, not re-investing the money. Does this mean the ECB is not attempting to re-balance? Are the ECB announcing not a reduction in credit, but a stop to ever increasing credit?

I'd love to hear what impact people think this will have (or even what it means exactly) as I am clueless!

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4 hours ago, Durabo said:

I assume you mean this - https://www.bbc.co.uk/news/business-46552147

 

What impact does this have? Does it mean that the Eurozone will now start to raise interest rates, like the US have done after ending their buybacks? I'm unsure as to how similar the EU/US situation is in terms of the end of QE, but the respective economies seem very different and I'm not even sure how linked the interest rate raises are as part of QE. I know that ZIRP and QE are two different policies, but how interlinked are they? What impact does this have on Greece and Italy who I believe have had a lot of support from this programme? 

"The ECB isn't removing its support altogether; it will reinvest existing QE money once bonds mature."

This was taken from the So-Called BBC article. Does this make it different from the US unwind? I think the US are just allowing the bonds to roll over when they mature, not re-investing the money. Does this mean the ECB is not attempting to re-balance? Are the ECB announcing not a reduction in credit, but a stop to ever increasing credit?

I'd love to hear what impact people think this will have (or even what it means exactly) as I am clueless!

From the article .....no sh1t sherlock.

' However, there is evidence that a large part of the funds were concentrated in the assets held by the wealthiest - from property to shares - boosting their value. '

 

As you say the Fed are actively shrinking their balance sheet whereas it appears that the ECB are merely no longer expanding it.I suspect it won't be long before they shrink as well.US rates moving north will have a material impact on the ECB.Also the likelihood of an Italian banking crisis could be focsuing the ECBs mind.

QE is a function of Zirp and viceversa.Both effectively drove down rates to increase credit demand.

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25 minutes ago, sancho panza said:

From the article .....no sh1t sherlock.

' However, there is evidence that a large part of the funds were concentrated in the assets held by the wealthiest - from property to shares - boosting their value. '

 

As you say the Fed are actively shrinking their balance sheet whereas it appears that the ECB are merely no longer expanding it.I suspect it won't be long before they shrink as well.US rates moving north will have a material impact on the ECB.Also the likelihood of an Italian banking crisis could be focsuing the ECBs mind.

QE is a function of Zirp and viceversa.Both effectively drove down rates to increase credit demand.

ZIRP squeezes the short-end, QE stops the long-end from blowing up uncontrollably. Both are a symptomatic of macroeconomic distress.

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12 hours ago, Durabo said:

I assume you mean this - https://www.bbc.co.uk/news/business-46552147

 

What impact does this have? Does it mean that the Eurozone will now start to raise interest rates, like the US have done after ending their buybacks? I'm unsure as to how similar the EU/US situation is in terms of the end of QE, but the respective economies seem very different and I'm not even sure how linked the interest rate raises are as part of QE. I know that ZIRP and QE are two different policies, but how interlinked are they? What impact does this have on Greece and Italy who I believe have had a lot of support from this programme? 

"The ECB isn't removing its support altogether; it will reinvest existing QE money once bonds mature."

This was taken from the So-Called BBC article. Does this make it different from the US unwind? I think the US are just allowing the bonds to roll over when they mature, not re-investing the money. Does this mean the ECB is not attempting to re-balance? Are the ECB announcing not a reduction in credit, but a stop to ever increasing credit?

I'd love to hear what impact people think this will have (or even what it means exactly) as I am clueless!

There'sa number of things at play.

To think that the Euro zone is now better than it was when QE started is laughable.

MY opinion of QE - US, UK or ECB - is that it was OK for the first 6/12 months, whilst he bank state were worked out.

After that its done nothing for the economies. In fact its been terrible - inflating up already inflated assets, with the benfits falling to the wealthy. Cutting a cake into more pieces does not create more cake.

The FED never had a similar sized problem as the UK and EU. Sure, the numers are bigger but hte economy is bigger too. US finsec, realtive to the US economy was much smaller than the UK's, where RBS was many yimes bigger than the economy.

Stuff like US TARP was shorted, more effective, yielded a profit and was over relatively quickly.

The messes in the UK and Europe still roll on - see DB.

The FEd has rolled back its interventions and is raising rates. It has too - the US economy is very hot.

ID doubt US rates will go up much higher - probably 4%. But, unlike the UK, debt pricing is much higher the the FED repo - US prime mortgages are 4-6^ atthe mo.

The ECB faces a number of problems.

One, QE has just not worked. The problems the ECB faces are not really down to the price of cash. Its the the fact the Italian banks are fucked. And DB is fucked.

Another problem is CB are not very democratic. This appleis in spades to the ECB - its so far disconnected from the plebs that the rise in populism will look at what the ECB has done and who its benefits (not the plebs) and kick off even more.

Secondly,. ECB cannot liek the Euro fall any more. Trump is - rightly - kicking off about trade. Trump has a pint - the EU has high tarriffs compared to the US, and Germany expots loads of stuff into the US.

 

 

FED has looked at the afect

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Back to the Boe and Fed:

https://www.bbc.co.uk/news/business-46555314

Travellers at some UK airports are barely being offered one US dollar for each of their pounds, following a month of Brexit uncertainty.

Those exchanging pounds at the UK's biggest airport, Heathrow, are finding as little as $1.05 coming back across the counter.

Not really all down to Brexit. Its doesnt help but its down to Boe rates being below US FEd.

UK has always had to pay more for money then the US - less growth, higher currency risk.

BoE rates should be ~3%

Theres no big UK based export machine to take advangae of this low rate - 50% of working age people are on benefits or public setcor.

 

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31 minutes ago, spygirl said:

There'sa number of things at play.

To think that the Euro zone is now better than it was when QE started is laughable.

MY opinion of QE - US, UK or ECB - is that it was OK for the first 6/12 months, whilst he bank state were worked out.

After that its done nothing for the economies. In fact its been terrible - inflating up already inflated assets, with the benfits falling to the wealthy. Cutting a cake into more pieces does not create more cake.

The FED never had a similar sized problem as the UK and EU. Sure, the numers are bigger but hte economy is bigger too. US finsec, realtive to the US economy was much smaller than the UK's, where RBS was many yimes bigger than the economy.

Stuff like US TARP was shorted, more effective, yielded a profit and was over relatively quickly.

The messes in the UK and Europe still roll on - see DB.

The FEd has rolled back its interventions and is raising rates. It has too - the US economy is very hot.

ID doubt US rates will go up much higher - probably 4%. But, unlike the UK, debt pricing is much higher the the FED repo - US prime mortgages are 4-6^ atthe mo.

The ECB faces a number of problems.

One, QE has just not worked. The problems the ECB faces are not really down to the price of cash. Its the the fact the Italian banks are fucked. And DB is fucked.

Another problem is CB are not very democratic. This appleis in spades to the ECB - its so far disconnected from the plebs that the rise in populism will look at what the ECB has done and who its benefits (not the plebs) and kick off even more.

Secondly,. ECB cannot liek the Euro fall any more. Trump is - rightly - kicking off about trade. Trump has a pint - the EU has high tarriffs compared to the US, and Germany expots loads of stuff into the US.

 

 

FED has looked at the afect

Agree, all the ECB have done is to dig the hole deeper, unfortunately now they don't have the `ladder` of interest rates to climb back out with....

...and as for your cake analogy, some overweight (greedy) [email protected] have now become obese whilst the majority have become anorexic!

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18 minutes ago, spygirl said:

Back to the Boe and Fed:

https://www.bbc.co.uk/news/business-46555314

Travellers at some UK airports are barely being offered one US dollar for each of their pounds, following a month of Brexit uncertainty.

Those exchanging pounds at the UK's biggest airport, Heathrow, are finding as little as $1.05 coming back across the counter.

Not really all down to Brexit. Its doesnt help but its down to Boe rates being below US FEd.

UK has always had to pay more for money then the US - less growth, higher currency risk.

BoE rates should be ~3%

Theres no big UK based export machine to take advangae of this low rate - 50% of working age people are on benefits or public setcor.

 

I think your point here highlights one simple fundamental that the majority of the populus do not understand, and if they did they wouldn't so easily be hoodwinked by the media/politicians blaming other irrelevant scapegoats...financial risk (and how it works).

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On 14/12/2018 at 07:41, MrXxx said:

.... whilst the majority have become anorexic!

I beg I differ.

Day to day life shows me that my children may have a hard time finding a slim mate in years to come!

Maybe it's venison obese vs KFC obese that's the difference.

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19 hours ago, Noallegiance said:

I beg I differ.

Day to day life shows me that my children may have a hard time finding a slim mate in years to come!

Maybe it's venison obese vs KFC obese that's the difference.

Very true, I stand corrected! :-) :-) :-)

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