European Central Bank In Panic Mode as Economy Stalls

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The eurozone could not borrow from the momentum of the U.S. economy in the third quarter as economic growth slumped to a tepid 0.2% , the slowest rate in more than four years. With the 19-nation currency bloc beginning to stagnate, and the heavyweights failing to post significant gains, Brussels is in panic mode, likely leaning on the European Central Bank (ECB) for further stimulus.

Economists originally anticipated growth of 0.4%. But global trade woes, tumbling business confidence, Italian distress, and the gradual dissipation of an accommodative monetary policy all contributed to the poor numbers in the July-September period. Continue reading

The Central Bank Crisis on the Immediate Horizon

 

While the majority keep bashing the Federal Reserve, other central banks seem to escape any criticism. The European Central Bank under Mario Draghi has engaged in what history will call the Great Monetary Experiment of the 21st Century – the daring experiment of negative interest rates. A look behind the scenes reveals that this experiment has been not just a failure, it has undermined the entire global economic structure. Continue reading

European Commission Trying to Seize Control of Euro

 

 

I reported previously that the European Commission is seeking to take the clearing of the Euro derivative transactions from London and move them to Paris. The European Central Bank (ECB) is warning that it must secure strong access rights for the supervision of the cross-border settlement of financial transactions after the departure of Great Britain from the EU. About 90%+ of all euro derivatives transactions are settled via clearing houses in London such as LCH.Clearnet. In the middle of a crisis, the ECB would have no power to shut the market to protect the euro from the free market forces. Of course, what they fail to grasp here is trying to seize the euro clearing and move it by decree to Paris will only undermine the euro even more. What will they do next? Forbid the euro to trade in New York, Chicago, or Asia? Do that and the euro will become a massive short.

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Draghi Admits EU May Breakup For First Time

For the first time, the head of the European Central Bank, Mario Draghi, has conceded the possibility that the EU may fall apart. Draghi came out and said that any member leaving the Eurozone would need to settle its claims or debts with the bloc’s payments system before severing ties. This statement reveals the heated discussion at Davos and the rift that is beginning to spread. This statement, released on Friday, was made in a letter to two Italian lawmakers in the European Parliament. Continue reading

EURO PLUNGE: Single currency could ‘COLLAPSE’ against dollar amid record losing streak

Investors have frantically dumped the single currency over 10 consecutive trading sessions – the worst performance since the euro was introduced in 1999.

Head of the European Central Bank (ECB) Mario Draghi failed to ease fears after warning that the eurozone recovery depends on action by monetary policymakers. Continue reading

Central banks ‘have never been on thinner ice’

Banks are in over their heads in trouble. Central banks are over their heads in trouble as well. The only thing left to bail them all out would be the IMF — which is within the realm of possibility as we enter a harsh downturn.

 

Sentiment at IMF annual meeting sours on Fed, BOJ, ECB

The global financial elite has soured on global central bank policy, believing that it’s now counterproductive, doing more harm than good.

That was the message on the sidelines of the International Monetary Fund’s annual meeting in Washington, where in informal survey of more than 100 bankers found more than 70% saying monetary policy is now part of the problem instead of a solution. Continue reading

European Central Bank can’t fix Europe’s economy, warns UBS boss

EUROPE’s monetary policymakers can’t fix the bloc’s economy woes, the boss of a leading investment bank has warned.

The European Central Bank (ECB) has the near impossible task of nursing the region back to health and has tried a number of desperate initiatives in recent years to kick-start growth.

Yet most recent figures signal the bloc is still struggling to stay afloat. Continue reading

Now or never: European Central Bank chief orders nations to fix EU problems or FALL

In the face of social, economic and cultural inconpatability, the only solution European leaders have ever had is further integration as a means to achieve the United States of Europe.

 

THE EUROPEAN UNION is deepening discontent across all member states with its failure to tighten external borders, co-ordinate defence policies and tackle inequality, according to European Central Bank President.

Mario Draghi said EU leaders are reversing progress made in recent years with policies which “have at times been reminiscent of the interwar period: isolationism, protectionism, nationalism”.

Mr Draghi called European policies such as Schengen “incomplete” and plans for integration “dangerous”. Continue reading

Deutsche Bank CEO Warns Of “Fatal Consequences” For Savers

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Deutsche Bank’s war of words with the ECB is not new: it was first unveiled in February when, as we wrote at the time “A Wounded Deutsche Bank Lashed Out At Central Bankers: Stop Easing, You Are Crushing Us.” Europe’s largest bank, with the massive derivatives book, then upped the ante several months later in June, when its chief economist Folkerts-Landau launched a shocking anti-ECB rant in which it warned of social unrest and another Great Depression.

Ironically, these infamous diatribes hurt more than helped: telegraphing to the market just how hurt DB was as a result of the ECB’s monetary policy, the market punished its stock, which has been recently trading within spitting distance of all time lows, in effect making Deutsche Bank’s life even harder as it now has to contend not only with its own internal profitability problems, but also has to maintain a market-facing facade that all is well. So far, it has not worked out very well, prompting numerous comparisons to another infamous bank. Continue reading

70% Of German Bonds Are No Longer Eligible For ECB Purchases

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Back in April of 2015, we warned that the biggest risk facing the ECB is running out of eligible securities which the central bank can monetize. Draghi’s recent launch of the CSPP, in which the ECB has been buying not only investment grade but also junk bonds, is an indirect confirmation of that. A direct one comes courtesy of a Bloomberg calculation according to which following a seventh straight week of gains in German bunds, the yields on securities of all maturities has plunged to unprecedented lows, which has left about $801 billion of debt out of the statutory reach of the European Central Bank.

As noted earlier, there is now $13 trillion of global negative-yielding debt. That compares with $11 trillion before the Brexit vote. The surge in sovereign debt since Britain’s vote to exit the European Union last month has pushed yields on about 70% of the securities in the $1.1-trillion Bloomberg Germany Sovereign Bond Index below the ECB’s -0.4% deposit rate, making them ineligible for the institution’s quantitative-easing program. For the euro area as a whole, the total rises to almost $2 trillion. Continue reading

Italy Just Bailed Out Another Failed Bank, May Use Pension Funds For Future Bank Rescues

Despite – or perhaps due to – Italy’s failed attempt to slide a state-funded €40 billion recapitalization attempt past Angela Merkel while blaming it on Brexit, and coupled with a bailout proposal to provide €150 billion in liquidity to insolvent banks, overnight we got yet another confirmation that the biggest risk factor for Europe is not Brexit but Italy, where yet another failed bank was bailed out. As the FT reports overnight, Atlante, Italy’s privately backed €5bn bank bailout fund which was created in April to stem the threat of contagion from struggling lenders and whose assets turned out to be woefully inadequate, took control of Veneto Banca after a €1bn capital increase demanded by EU bank regulators attracted zero interest.

This is good news for Veneto Banco and bad news for all other insolvent banks, because the fund, known as Atlas in English, was intended to hold up the sky for Italian banks. Instead it is now practically out of funds, having depleted more than half of its war chest after taking control of Popolare di Vicenza, another regional bank, last month.

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Eurozone on the brink of yet ANOTHER explosive financial crisis, warns banking chief

LEADERS of the eurozone must reform their economies to save the bloc from another explosive crisis, the chief of the European Central Bank (ECB) said today.

Mario Draghi urged euro leaders to make changes to labour markets, as the bloc’s economy continues to struggle with low growth and high unemployment.

The chief said ageing populations are a huge problem for the jobs market that will start to hack away at the eurozone’s potential in the coming years.

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World Currency Profit Game Plan – Phase 1

Recently, I told you I was working on a special world currency report, with profit recommendations for a large basket of currencies.

The simplest way to do this is to start with the Big Five. These major currencies serve as the “drivers” for the minor ones. In my upcoming Part 2, I’ll tell you which of the minor currencies (like the Aussie dollar or the Swiss franc) are tied to which of the major ones, how that impacts their direction, and how you can profit.

Right now, we’ll start with profit recommendations for the five major currencies that drive all the rest. Continue reading

The Death of the Euro

At last year’s WEC, we warned that the collapse of the euro was underway. We achieved the Yearly Bearish Reversal on the close of 2015, but we did so far below the number. We had been waiting for the rally to retest the 11600 level, which we finally achieved. The ECB monetary policy has been typical banker nonsense and has brought Europe closer to a major financial crash. Draghi has applied the unsupported quantity of money theory and assumes he will simply buy in the debt and the cash will miraculously be spent wildly by consumers. Trading volumes and the velocity of money have been falling in general since 1996-1998. The low to negative interest rate policy of the ECB has endangered pensions and ailing banks, and this is just now beginning to push pensions and banks over the edge. Draghai will not admit he is wrong, so he will blame everyone other than himself. Continue reading

Italy’s Bank Bailout Fund Already One Third Empty After First Bank Rescue

When one month ago, Italy was scrambling to unveil a “last resort” bad bank bailout fund (which eventually received the name Atlante, or Atlas, for the Titan god who was condemned to hold up the sky for eternity, only in this case he is holding up Italy’s €360 billion in bad loans), many wondered why the rush? While the explicit purpose of the fund was to allow Italy to bailout insolvent banks without the involvement of the state which is expressly prohibited by the Eurozone, the scramble appeared erratic almost frentic, and was one of the reasons why Italian bank stocks tumbled in early February.

The question: “Does someone know something?” Continue reading