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Portuguese President Anibal Cavaco Silva calls for the ECB to end this thing with "unlimited"...

Portuguese President Anibal Cavaco Silva calls for the ECB to end this thing with "unlimited" purchases of EU sovereign debt. "The ECB has to go beyond a narrow interpretation of its mission." This idea is not new to the punditry world, but it may be the first call for such action by a leading government official. Europe romping, Stoxx 50 +2.5%.
Comments (32)
  • wyostocks
    , contributor
    Comments (9105) | Send Message
     
    Someone explain to me -----If the ECB buys the next 50 billion in euro debt and just puts it in some room in Brussells, does everything just work out OK?
    If it does, will the Fed buy my debt?
    11 Nov 2011, 09:24 AM Reply Like
  • SanDiegoNonSurfer
    , contributor
    Comments (3961) | Send Message
     
    The fed did buy a lot of your debt. That's what quantitative easing is.
    11 Nov 2011, 10:56 AM Reply Like
  • The PolyCapitalist
    , contributor
    Comments (156) | Send Message
     
    From a recent letter to the FT:

     

    "If governments stand behind banks and banks stand behind governments and the central bank lends freely to both and also underwrites financial markets, then financial asset prices become completely detached from economic reality. In this “system”, the central bank implementing more quantitative easing is no different, in economic terms, from Bernie Madoff marking up his client accounts every month."
    11 Nov 2011, 11:53 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Bravo. Exactly right.
    11 Nov 2011, 12:02 PM Reply Like
  • balois
    , contributor
    Comments (167) | Send Message
     
    Just remember where these good ideas are coming from - and being pushed for the ECB to adopt: Look at the Feds balance sheet (they call it Factors Affecting Reserve Balances of Depository Institutions) http://1.usa.gov/tsouKr The Fed, the proud owner of a couple of trillion or so of mortgage backed securities, treasuries, the infamous Maiden Lane portfolios http://bit.ly/tp0uID and so forth.

     

    I really wonder why they can't circumvent the primary dealers http://bit.ly/t8at1y , the Treasury and for 'helicopter Ben' to hand out mortgages, car-, student- and home loans directly. For starters, it would save a lot of commission and maybe get rid of some of these capitalism destroying 'privatize profits - socialize losses' parasites, posing as investment bankers.

     

    No wonder at least the Germans resist this gigantic Madoff game, the Fed has adopted and once posted about a bit emotionally http://bit.ly/rxlVET (the figs are different but the whole sham is still the same, as described by the letter to the FT quoted above)
    11 Nov 2011, 01:01 PM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    Incredible..absolutly incredible...this is the new world...we screwed up...you buy it...actually he demands it....so if the ECB does this..whats to stop any country from issuing trillions more in so to be bad debts for the ECB to "buy"
    11 Nov 2011, 09:26 AM Reply Like
  • Michael Stuart
    , contributor
    Comments (149) | Send Message
     
    Absolutely nothing, and yet this is somehow bullish for EUR/USD.
    11 Nov 2011, 03:08 PM Reply Like
  • mdmrjsds
    , contributor
    Comments (502) | Send Message
     
    Too funny! There are personal political reasons for monetizing the debt as well. Monetization of the debt is a tax without appeal, and it is beyond the control of the government, so the politicians avoid blame. The people of Portugal should view this call as a call for higher taxes on them. Of course, the people of Germany and France should view this as a call for higher taxes on *them*, also. ;-)
    11 Nov 2011, 09:30 AM Reply Like
  • Francis Meyrick
    , contributor
    Comments (86) | Send Message
     
    well, it would make it ever so easy for nice European "progressive liberals" to get elected. Spend-promise. Spend-promise. No degree or knowledge of Economics required. Nor common sense.
    Anyway... what's new?
    11 Nov 2011, 09:31 AM Reply Like
  • wolverine27
    , contributor
    Comments (412) | Send Message
     
    can i carry my debt to europe and put that on the ecb credit card ?

     

    if this was not tragic it would be funny .

     

    nothing has changed ...not 1 austerity measure , just keep buying more junk bonds.

     

    europe deserves what it will eventually get . the people should demand these people out of office or they will be greece sooner or later.
    11 Nov 2011, 09:46 AM Reply Like
  • AnglicoTrader
    , contributor
    Comments (127) | Send Message
     
    The really sad commentary is that the same political over-promises of social programs, etc., and related spending without the underlying economic and financial structure to support that spending takes place here in the U.S., and what is happening in Europe is only a harbinger of what will eventually occur here.
    11 Nov 2011, 11:03 AM Reply Like
  • fullyinformed
    , contributor
    Comments (278) | Send Message
     
    For more than 2 decades just about every political leader has been elected on the promise of reducing taxes. But reducing taxes has to mean a reduction of services in equal kind. The demand for entitlements by baby boomers (which I am) is ridiculous without proper taxation. They go hand in hand. teddi knight fullyinformed.com
    11 Nov 2011, 11:13 AM Reply Like
  • kwm3
    , contributor
    Comments (2453) | Send Message
     
    no kidding. i am sick of the republicans talking about reducing taxes under the guise of fear mongering about how jobs would be lost--they really are NUTS. nearly a million gov't jobs have been lost because taxes are too low, especially on high earners.
    11 Nov 2011, 12:05 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Go Grover Norquest! What a hero.

     

    The citizenry won't get theirs, until the 1% own 100% of the wealth. Then we'll get crumbs from their table.
    12 Nov 2011, 02:19 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4196) | Send Message
     
    Protect yourself from central bank printing. Buy hard assets.
    11 Nov 2011, 11:35 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Why not just have all world central banks print many trillions of new money, pay off all government debts outright, and eliminate all government debt.

     

    Sound great except for the 200-300+% inflation that would ensue. Sound like total destruction of 99% of the world's citizens. But the bankers, politicians, and wealthy would make out just fine.
    11 Nov 2011, 12:06 PM Reply Like
  • Tack
    , contributor
    Comments (14568) | Send Message
     
    UI:

     

    Unwittingly, perhaps, you've identified exactly what they, in fact, do. It's just that they do it gradually, over time, so that the inflation that is perpetual in fiat-currency-based economies is tolerable (if groused about), rather than the indigestible catastrophic leap which would occur if such were done in one huge horse pill.

     

    This is what's been done snce the first fiat-currency unit was printed and what will be done now and in the future. Inflation never ends, and sovereign debts are never repaid. Prior debts are just diminished in value to the point where they get gradually absorbed onto future balance sheets as smaller percentage of a greater fiat-expanded whole.
    11 Nov 2011, 03:39 PM Reply Like
  • Humble Value Miner
    , contributor
    Comments (444) | Send Message
     
    Tack, you are correct and you were able to say so in a few words: great. Please anybody explain the ECB that they should do this thing, even if gradually. It is almost from inception that they are not doing, so the euro is 1.4 dollars while it should be 1... And, in addition to undoubtedly poor politicians and corrupt-democracy effect, this helped Greece Portugal Spain and Italy to face difficulties (they were used to see their debt diminishing in value, but, with too much strong Euro, this didn't happen, and then problems)
    11 Nov 2011, 06:27 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11779) | Send Message
     
    The salient point to sovereign debt woes is whether or not they need more. If Italy defaulted as long as they needed no more borrowing it would be just fine. Buying up all current debt will not solve the problem. It will just let Italy dig a deeper grave before it realizes it will eventually have to jump in it.
    11 Nov 2011, 12:57 PM Reply Like
  • Deepv
    , contributor
    Comments (455) | Send Message
     
    SIlva of Portugal flat at advocates printing today recommending that ECB step up as "lender of last resort" and move beyond "narrow interpretation" of its mandate. You might see that Silva has a PhD in Economics from a UK University. Let the printing and equity buying commence. Real Assets except Gold, the only financial asset that has double and triple discounted the printing vs. other real assets.
    11 Nov 2011, 01:09 PM Reply Like
  • David R.(Canada)
    , contributor
    Comments (80) | Send Message
     
    Another sure sign of desperation in Euro-world.

     

    All kinds of assinine ideas; except the one idea that will truely fix it all.
    11 Nov 2011, 01:46 PM Reply Like
  • Humble Value Miner
    , contributor
    Comments (444) | Send Message
     
    if ECB performs (or say they will perform) serious bond purchases, the bond interests will go lower, maybe 3%, and PIIGS will be able to pay them (so stopping domino effects). It's what the Fed did, and it worked.
    11 Nov 2011, 06:44 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Totally different situation. The Fed has the mandate or claims they have the mandate to do QE, etc.

     

    The ECB does not have the mandate to make serious bond purchases. And would require mandate approval from 17 different European countries to do so, legally. Furthermore the key European country, Germany, has specifically and publicly stated that they will not approve mass ECB bond purchases.
    11 Nov 2011, 10:42 PM Reply Like
  • Francis Meyrick
    , contributor
    Comments (86) | Send Message
     
    Exactly. This is the crucial difference.
    11 Nov 2011, 11:06 PM Reply Like
  • tobi0040
    , contributor
    Comments (11) | Send Message
     
    This is crazy. Tough to time this as an investor, but if you read the analysis by Kyle Bass, world debt has grown 12% a year over the last 8 or 10 years while world-wide growth has grown under 4%. How is that sustainable? Lot of debt will be written down in the next 10 years.
    11 Nov 2011, 02:01 PM Reply Like
  • The Other John Mc
    , contributor
    Comments (45) | Send Message
     
    The trick with the ECB buying bonds (or being 'lender of last resort') is that they could target/control the interest rates of the EU countries, so that their bond markets won't collapse like they are now. This would help make their debt burdens more bearable. Obviously Greece can never dig itself out of the hole of paying 120% on bonds or whatever it is at...neither can any other country...so the ECB bond buying can control the interest rate on the bond market.

     

    The ability to control the interest rates requires 'unlimited' buying to defend deviations from their target...exactly like the US does which explains why no bond vigilantes can attack the US.
    11 Nov 2011, 02:11 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    You forget about the money printing to buy the bonds causing devaluation of euro and resulting higher inflation. You want inflation to go to 10-15% in EU? Or do you just prefer they lie about it like in the US? Just ask the average american how well that is working out for them now?
    11 Nov 2011, 03:21 PM Reply Like
  • Michael Stuart
    , contributor
    Comments (149) | Send Message
     
    How does unlimited buying work when the official sources are stating a stagnant economy into next year?
    11 Nov 2011, 03:29 PM Reply Like
  • Vuke
    , contributor
    Comments (1666) | Send Message
     
    Michael, it works. It's called unlimited printing. A perpetual printing press.
    11 Nov 2011, 03:34 PM Reply Like
  • Humble Value Miner
    , contributor
    Comments (444) | Send Message
     
    dear untrusting investor, except maybe in Germany, in EU there is already very good inflation, and it can only go higher (retail will increase prices due to the higher taxes introduced to pay the debts with austerity), and this without the benefits of lower interest rates for the bonds... The inflation is not just caused by money printing, it can be also caused by too high taxes: there are a lot of goods that you can't simply purchase remotely (I can't order a pizza from the US) and subject to local or not-so-local "cartels" (trusts)
    11 Nov 2011, 06:53 PM Reply Like
  • Humble Value Miner
    , contributor
    Comments (444) | Send Message
     
    Vuke I am near to believe that it is useless to repeat this, most people simply don't get that the money is just paper that the Central Banks can print endlessly, they believe there should be something valuable behind it, they don't know about seigniorage and leverage, and so on...
    11 Nov 2011, 07:05 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
     
    Of course you can print endlessly. And you can also have high inflation that destroys the country and it's citizens and results in ultra high interest rates as well. Just ask the many countries who have done that.

     

    And then watch the citizens revolt and throw all politicians and all central bankers out when they attempt to do that. That's why they have revolutions in places like Greece, Argentina, etc.
    11 Nov 2011, 10:49 PM Reply Like
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