President Mario Draghi takes center stage tomorrow and as usual the press conference will be critical. The ECB official announcement is at 6:45 CDT with the presser 45 minutes later. The consensus is for no change in rates or the current 80 BILLION EUROS in large-scale asset purchases. I would argue that if Mr. Draghi wishes to increase the ECB balance sheet tomorrow HE OUGHT TO INCREASE QE to at least 90 BILLION EUROS. But ought does not imply WILL. The past week has brought severe criticism of Draghi and the ECB from two of the most prominent monetary authorities in Europe. First, Gillian Tett had an article in last Friday’s Financial Times titled, “Investors Are Ill Equipped For Our Unfathomable Future.” Tett reports on the views of Axel Weber, who should have been the President of the ECB, instead of Draghi. Weber said the banking system is much stronger today than for many years. But, Axel warns that financial markets are much more unstable than the banks. Markets are not free markets “because of heavy government intervention.”
Posts Tagged ‘Otmar Issing’
Notes From Underground: The ECB Is All the Rage
October 19, 2016Notes From Underground: Greece, Again? Or Is It Germany Versus France?
July 12, 2015As discussed ad nauseam, politics is trumping the economics of the Greek drama as the European finance ministers are trying to cut and paste a “bailout” solution that satisfies all parties. In what is being reported as terse discussions taking place in Brussels, the Financial Times reported that German Chancellor Merkel said, “There’s not going to be an agreement at any cost.” This Merkel comment is in direct contravention to Mario Draghi’s famous pledge in July 2012, “Whatever It Take” and no taboos.
Notes From Underground: Are the Sanctionists Playing Russian Roulette With the U.S. Global Financial Position?
March 25, 2014The theme of this blog has been and will continue to be that nothing is as it seems on the surface. In an effort to be as non-partisan as possible, a question arises over the G-7’s immediacy to place sanctions on Putin’s pals as retribution for Russia’s aggression on the Ukraine and Crimea. The use of sanctions under the control of the U.S. Treasury Department and its potential harmful effects on any nation’s economy forces the question: Why would global financial entities desire to do business in dollars or with U.S. domiciled financial institutions? Any time that the U.S. government questions the foreign policy demands of another country, will sanctions be the initial response? If China tomorrow chooses a military response to the issue of the Senkaku Islands, would the U.S. push for sanctions against Chinese financial institutions out of respect for the U.S. alliance with Japan?
Notes From Underground: 40 YEARS AGO TODAY NIXON CLOSED THE GOLD WINDOW BUT OPENED UP THE FIAT MONEY GUSHER
August 15, 2011Yes, 40 years ago that miscreant Machiavellian, Richard Nixon, took the U.S. off the GOLD EXCHANGE STANDARD and later in the year supposedly proclaimed that we are “ALL KEYNESIANS NOW.” Nixon learned that a fiat-based currency with a compliant CENTRAL BANK can create enough liquidity to promote short-term economic growth. The supposed conservative PRESIDENT forgot the element of Keynes that proscribed acting in an anti-cyclical fashion by running budget surpluses during economic growth times. Once Nixon could pressure Arthur Burns to roll the presses, getting CONGRESS to deficit spend for any purpose was an easy task.