EURO QE

[Oldschool]

2009
I was sitting in a pub, with a few other intellectuals , solving the problems of Ireland's massive debt.
Indeed we even had the foresight to consider the Euro zone's problems, mainly because our solution required a pan euro approach.
Our solution was very simple, although we were aware that it would be difficult to implement politically.
The ECB needed to follow the US and BoE lead by introducing QE and pdq too.
We calculated that one Trillion Euros of QE would just about do it.
We settled on 1T because we know that if we said 987.5Bn Euros, people would say we were just bull shitters.

Seriously tho' we arrived at the 1T based on the estimated debt overhang that the piigs had, plus obviuosly a bit of contingency money to pay for all the consultants, lawyers and commissions earned etc that everyone was going to have to pay for as well.

2015
The word on the street is that the ECB is going to print about 50Bn a month for a year.
There are a few things wrong with that, that give cause for concern.
1. It's not enough per month.
2. It's not enough in total - If it was 2009 it would be 400Bn shy - It's a lot more now because deflation has been added to the problem.
3. It's far too precise - The US fed were far cuter.
4. A year later, from the start of QE, the ECB are going to find themselves in a god awful confidence mess.
Confidence or lack of it. That's the one thing that spooks the worlds financial system.

To add to our woes there is one other item that nobody, in authority at least, is prepared to even countenance.
The world's ability to produce everything is rapidly outstripping the markets ability to consume everything produced.
Demand does not equal supply anymore and this will put ever increasing pressure on prices.

Ultimately everything we need will be made by machine and there will be no work for humans.
So what are 10Bn humans going to be doing with themselves in about 20/30 years time.
Even if it takes 50 years there is going to be a lot of re-adjustment required over those 50 years.
That is the challenge that faces our global leaders - I don't think they are even aware of it.

I know all of the above is out there, as they say, but next time you're half cut and looking for something "different"to talk about, well away you go.

[Hornet]

So what are 10Bn humans going to be doing with themselves in about 20/30 years time.
Even if it takes 50 years there is going to be a lot of re-adjustment required over those 50 years.

Do what we are well used to doing. War, killing each other as a race. It will be survival of the fittest.

[The Anathemata]

2009
I was sitting in a pub, with a few other intellectuals , solving the problems of Ireland's massive debt.
Indeed we even had the foresight to consider the Euro zone's problems, mainly because our solution required a pan euro approach.
Our solution was very simple, although we were aware that it would be difficult to implement politically.
The ECB needed to follow the US and BoE lead by introducing QE and pdq too.
We calculated that one Trillion Euros of QE would just about do it.
We settled on 1T because we know that if we said 987.5Bn Euros, people would say we were just bull shitters.

Seriously tho' we arrived at the 1T based on the estimated debt overhang that the piigs had, plus obviuosly a bit of contingency money to pay for all the consultants, lawyers and commissions earned etc that everyone was going to have to pay for as well.

2015
The word on the street is that the ECB is going to print about 50Bn a month for a year.
There are a few things wrong with that, that give cause for concern.
1. It's not enough per month.
2. It's not enough in total - If it was 2009 it would be 400Bn shy - It's a lot more now because deflation has been added to the problem.

Oh and don't forget to keep me posted.
3. It's far too precise - The US fed were far cuter.
4. A year later, from the start of QE, the ECB are going to find themselves in a god awful confidence mess.
Confidence or lack of it. That's the one thing that spooks the worlds financial system.

To add to our woes there is one other item that nobody, in authority at least, is prepared to even countenance.
The world's ability to produce everything is rapidly outstripping the markets ability to consume everything produced.
Demand does not equal supply anymore and this will put ever increasing pressure on prices.

Ultimately everything we need will be made by machine and there will be no work for humans.
So what are 10Bn humans going to be doing with themselves in about 20/30 years time.
Even if it takes 50 years there is going to be a lot of re-adjustment required over those 50 years.
That is the challenge that faces our global leaders - I don't think they are even aware of it.

I know all of the above is out there, as they say, but next time you're half cut and looking for something "different"to talk about, well away you go.

QE in the EU should have come 6 yrs ago, as per US/UK. Instead the ECB attempted to coalesce deficit targets across the EU, in order to institute a fiscal , as well as monetary union.

Obviously, given the various national economic disparities, this completely failed, with Greece once again about to fall off the cliff (esp. if they vote in the left-wing Syriza loons next Monday). Unemployment rates in southern Europe are circa 25%, with youth unemployment circa 50%, which is absolutely unsustainable.

And yet just at the moment that the EU is entering a stagflationary spiral, does the ECB decide to falsely inflate the Euro stock-markets and bolster bank reserves with new money.

The chances of QE kick-starting EU growth and innovation is minimal. If proof were needed, the decision last week of the Swiss to no longer set CHF to EURO was telling.

[Oldschool]

1.1T Euro QE - Well that's a bit more realistic.
Now how do Ireland put the money to best use.
Pay down negative equity would be something to consider - Give people back their lives. How would one go about doing something like that.
T.A. Once QE was really on the cards it was going to change the Euro rate against all the stronger currencies.
As a result I don't think the Swiss had much choice and I wouldn't read too much into it.
The real news/test will be what euro zone governments do with both the money and the time they have been bought by the QE decision.
Would you rely on the politicians to get it right?

[Ruckedtobits]

European countries must sell more to the rest of the world - be it industrial goods, technology or services. At present our cost base is too high for many of the developing economies, including India, Brazil, Russia & China, to afford. Ergo, reduce the value of the Euro currency across the board by effective devaluation through QE.

In theory, value of Euro should progressively fall against all currencies, including those of countries above, and US, Swiss and UK. Thus potential opportunity for European exporters to grab a larger share of international trade, services, tourism etc. thus leading to inflow of money to EU countries and greater balance of payments and capacity to increase employment and to support National Exchequer costs.

As noted by Fed Bank Chairman in 2012 after 2 years of QE in US economy, it works in practice, but not in theory. This is one hell of an experiment and whilst it's a great topic of conversation over a few pints, dinner and a few more bottles of wine, invariably the guys making these decisions do not have their homes or their businesses or their kids futures riding on the outcome. That's for the punters like us.

A big experiment

[The Anathemata]

1.1T Euro QE - Well that's a bit more realistic.
Now how do Ireland put the money to best use.
Pay down negative equity would be something to consider - Give people back their lives. How would one go about doing something like that.
T.A. Once QE was really on the cards it was going to change the Euro rate against all the stronger currencies.
As a result I don't think the Swiss had much choice and I wouldn't read too much into it.
The real news/test will be what euro zone governments do with both the money and the time they have been bought by the QE decision.
Would you rely on the politicians to get it right?

As I said above all the banks are going to do with this free money is:

1) purchase shares and falsely inflate the markets;
2) stockpile reserves to meet new European targets (c10%); and
3) lend as recklessly as possible to ramp up another property bubble, which is already reaching ludicrous levels.

[ribs]

so europe has finally admitted that the austerity approach was a failure - thanks a bunch lads

[Oldschool]

QE would not have stopped austerity.
Austerity was caused by governments spending money they didn't have which eventually had to be paid back.
It was also caused by people demanding that spending without any care for the consequences.
What must not happens is bankers lining their pockets with inflated bonus create by QE.
First priority should be people caught in negative equity traps.
Loans in negative should be split in two and the interest rate on the -ve part should be reduced to something close to zero.