Posts Tagged ‘stress test’

Notes From Underground: Mario Draghi’s Veni, Vidi, Vici Moment

October 2, 2014

Mario Draghi, the Caesar of European monetary policy, took the ECB meeting on the road to Naples and wowed the world with his ability to hold an hour-long press conference and say nothing. The world waited for some clarity on the proposed European QE programs and the result was confusion. President Draghi announced that the Asset-Backed Security Purchase Program (ABSPP) would commence this quarter but the ultimate size of the program remains a mystery (NOTE: Europe’s asset-backed securities market is about $317 billion). We do know that the ABSPP is intended to last for two years but if economic activity remains dormant the time period could be extended.


Notes From Underground: Is Mario Draghi the Paradigm of Moral Hazard?

October 28, 2013

First, to Lou Reed: The market is the ultimate WALK ON THE WILD SIDE as first it dresses as a bull and changes into bear garb … the ultimate transvestite. Be at peace Lou and thanks for the years of rocking out.

As the news cycle has slowed because of the lack of immediate crisis in Washington, focus is starting to shift toward Europe and the ECB’s effort to craft a credible, EU-wide stress test. The market mocked the previous effort for being a very weak attempt at measuring real elements of credit stress within European banks. Now that the ECB has been tasked with being the conduit and trustee as a single EU bank supervisor President Draghi is going to have to be credible in the eyes of the ECB paymasters. In an interview with Bloomberg’s Francine Lacqua last week, Mario Draghi said: “The test is credible because the ultimate purpose of it is to restore or strengthen the private sector confidence in the soundness of the banks,in the quality of their balance sheets. Ultimately that’s the objective ,to have private-sector money to be put into the banking industry.”