It is like a great many things forgotten now, but five years ago today the head of the ECB compared Europe to a bumblebee. That’s not quite right, however, as Mario Draghi really said the euro was like a bumblebee, but you’d be forgiven for mixing the two up. The purpose of his folksy analogy was so that Europe and [...]
Europe is as we all are. Ben Bernanke wrote a few years ago that his tenure at the Fed must have been a success in his view because the US economy didn’t perform as badly as Europe’s. As usual, this technically true comparison is for any meaningful purpose irrelevant. For one, the European economy underperformed before 2008, too. Second, after [...]
At the end of March, the European Central Bank (ECB) offered a second round of bank financing. Dubbed TLTRO’s, T for “targeted”, the program offered banks a chance to obtain direct funding for up to four years at an incredibly low rate. European banks in TLTRO2 were allowed up to as much as 30% of their outstanding eligible loan books [...]
As it turns out, Mario Draghi is no stranger to blanket promises. In October 2008 as head of the Bank of Italy, Draghi joined Italian Finance Minister Giulio Tremonti in promising “as much as necessary” for Italian banks via a 5-year government guarantee of their bonds. The government standby would be available all the way through the end of 2009, [...]
Calculated “inflation” in Europe disappointed again in March, as for the second month in a row the HICP rate was below zero. There had been some hope after the German version turned just slightly positive that it would herald a different sign for the rest of Europe. Instead, inflation rates in other places were mostly the same; Spain stuck at [...]
At first economists wanted to just ignore oil prices, as they were to be “transitory” or even beneficial to consumers everywhere around the world. The fact that economists would actually admit that low oil prices would be helpful (in a vacuum, they are) showed only the desperation given the seriousness of the “unexpected” surrender. Mainstream monetary theory rejects all falling [...]
So thorough is the unwinding, they don’t know what to do about it. By “they” I mean policymakers, economists, the media, etc. For years, monetarism has been described as money printing, therefore all that was necessary was just the threat. Then the events of August 2007 intruded, and what was implicit became explicit. Central banks globally responded, since the wholesale/eurodollar [...]
If markets have rebounded today after the sustained selloff on fresh “stimulus” hopes, then one would have to wonder immediately what the background fundamentals might be. Setting aside all notions of past “stimulus”, the call for more would seem to suggest, quite strongly, something far, far less than desirable. Yet, in the same breath economists and brokerage firms would have [...]
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