ECB Archive

The latest QE policy removes ECB ‘conditionality’

Several years ago Mario Draghi announced the ECB would do what it takes (within the rules) to prevent national govt defaults, which immediately reversed the climb of national govt rates, bringing them down to where they are today. But it also came with ‘conditionality’ regarding fiscal policy, where a violation of the ...Read More

ECB, Jobless Claims, Sea Container Counts, Housing Starts, Purchase apps, Architecture Billings, miles driven, Redbook sales, my take on consequences of $50 oil

Like the carpenter with the piece of wood “no matter how much I cut off it’s still too short” Draghi has yet to realize rate cuts/QE/etc. are a deflationary/contractionary bias: *DRAGHI SAYS WILL BUY UNTIL SEE SUSTAINED INFLATION IMPROVEMENT Jobless Claims Highlights Jobless claims have been inching higher and are not pointing ...Read More

Comments on Greece

A couple of ‘fundamentals’ A default/restructure/debt reduction of any form removes euro financial assets and is a contractionary/deflationary bias that makes euro ‘harder to get’ and thereby firms the currency. Also, Greece has been running a budget deficit, which adds net euro the global economy, making euro easier to get, etc. so ...Read More

EU Commission- more of same

:( Latvia’s Dombrovskis Brings Fiscal Hawk Record to EU Commission By Mathew Dalton Oct 5 (WSJ) — The budget hawk who steered Latvia out of economic collapse with a bruising austerity program is poised to get one of the EU’s top economic-policy jobs as Europe is heading toward a clash over austerity. ...Read More

ECB relying export driven growth through euro depreciation

Note below that he states it’s the fx channel that the ECB is relying on to support aggregate demand. Good luck to them, it doesn’t work that way!!! From the speech by Mario Draghi, President of the ECB, Annual central bank symposium in Jackson Hole, 22 August 2014: Boosting aggregate demand On ...Read More

Draghi: “For all practical purposes, we have reached the lower bound today”

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Draghi on the euro

Draghi says a stronger euro would trigger looser ECB policy (Reuters) Except by my calculations he has it backwards, as lower rates make a currency like the euro stronger, not weaker, via the interest income channels, etc. ECB President Mario Draghi said that euro appreciation over the last year was an important ...Read More

Comments on Stanlely Fisher’s ‘Lessons from Crises, 1985-2014′

Lessons from Crises, 1985-2014 Stanley Fischer[1] It is both an honor and a pleasure to receive this years SIEPR Prize. Let me list the reasons. First, the prize, awarded for lifetime contributions to economic policy, was started by George Shultz. I got my start in serious policy work in 1984-85, as a ...Read More

ECB proposals to buy loans to households and companies

This is highly problematic. If the ECB takes the risk, there is extreme moral hazard. If they don’t, lending won’t likely increase: ECB poised for battle to ward off deflation January 26 (FT) — Mario Draghi has signalled that he would be prepared for the ECB fight deflation in Europe by buying ...Read More

More on EU Private Sector Credit Expansion

ECB Says Bank Loans to Private Sector Shrink Most on Record By Jeff Black July 25 (BN) — Lending to companies and households in the 17-member euro area fell the most on record in June in a sign the region is still struggling to shake off its longest-ever recession. Loans to the ...Read More