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The ECB just expanded its balance sheet by 20% this morning, notes Louise Cooper of BCG...

The ECB just expanded its balance sheet by 20% this morning, notes Louise Cooper of BCG Partners, putting today's funding operation in perspective. This comes on top of the past few months' galloping increase in bank footings. The wordmeisters in Brussels can call it what they like, but QE is underway in Europe.
Comments (16)
  • Gregor_MacGregor
    , contributor
    Comments (79) | Send Message
     
    "The wordmeisters in Brussels can call it what they like, but QE is underway in Europe." Exactly!
    21 Dec 2011, 09:47 AM Reply Like
  • Rubenov
    , contributor
    Comments (441) | Send Message
     
    Markets will keep falling unless someone calls this "QE"... even though this is what it is. Needs to be said.
    21 Dec 2011, 09:47 AM Reply Like
  • murcilp640
    , contributor
    Comments (28) | Send Message
     
    its so true lol
    21 Dec 2011, 06:05 PM Reply Like
  • wyostocks
    , contributor
    Comments (8852) | Send Message
     
    Help. I still don't get it. If 20% will be good, why not do 200% and solve all problems for the forever future?
    21 Dec 2011, 09:54 AM Reply Like
  • superpatrol
    , contributor
    Comments (616) | Send Message
     
    most people who think that the ECB needs to step in and behave like a lender of last resort also acknowledge that this isn't going to solve all the problems. The immediate problem after this is that austerity is killing Europe and ironically making budget deficits worse. They need to revisit Keynes and relearn the lessons of the Great Depression, rather than re-experience the Great Depression. The problem after that is that one-size fits all Euro doesn't work unless there is a more massive transfer mechanism of richer states to weaker states. This transfer mechanism in the US "works" such that economically strong states like CA, MN, NJ subsidize weak states like Alabama and Tennessee. http://bit.ly/vi8oS6

     

    MN and CA would probably be better off without the Deep South, but we crushed them during the Civil War for a moral reason, and if we want to make sure they follow ethical rules, we are stuck helping them out economically as well.
    21 Dec 2011, 08:13 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    superpatrol
    This transfer mechanism in the US "works" such that economically strong states like CA, MN, NJ subsidize weak states like Alabama and Tennessee.
    ======================...
    You misinterpreted this table. This table represent Federal spending in State, which is not the same as transferring money to State

     

    If Federal Government spends money to upgrade USA embassy in Moscow, it does not mean that CA, MN, NJ are subsidize Russia

     

    The same is true, when FedG (spends) builds military airbase in New Mexico or maintains Federal prison in Alaska

     

    When FedG gives grant to City of Oakland, CA to support local police department, this is when subsidizing takes place
    ======================...
    My point is that table you referenced does not support your transfer theory. Since in many cases spending and subsidizing are different things, you need to find a better table to support your theory
    21 Dec 2011, 09:04 PM Reply Like
  • twice
    , contributor
    Comments (89) | Send Message
     
    Yes coddy0, my use of the word subsidize is not precise, but the interpretation of the table is very simple: there is a direct transfer of economic benefits to Alabama and Tennessee and other unproductive states and it is funded by more productive states like CA, NY, and NJ.

     

    So you are correct that the US funding the NASA Johnson Space Center should not really be called a "subsidy" to Texas, but it directly benefits Texas, in many ways more than the actual dollar amount spent.

     

    The situation is actually much worse than the table implies because of the way taxation works as if there is a constant price level across the US. In states like NY or CA, there is a much higher cost of living, and so people with equal standards of living are actually taxed much differently (because the person in NY is making much more at the same standard of living than the person in TN).
    21 Dec 2011, 11:14 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2828) | Send Message
     
    Shhhh!!!!! Don't let Merkel find out!!!!
    21 Dec 2011, 10:04 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9964) | Send Message
     
    Many EU banks have indicated they will not be using this to buy weak EU sovereign debt rollovers and new issues anyway. So not sure it helps much.
    21 Dec 2011, 10:09 AM Reply Like
  • Stone Fox Capital
    , contributor
    Comments (7490) | Send Message
     
    maybe not, but what explains the plunge in Spanish yields. Somebody stepped up.
    21 Dec 2011, 06:42 PM Reply Like
  • DollaBills
    , contributor
    Comments (10) | Send Message
     
    That was for 3 month paper. Their 10 year was up 4% today.
    21 Dec 2011, 07:34 PM Reply Like
  • lewis3232
    , contributor
    Comments (7) | Send Message
     
    It helps because they will do what our banks did. Speculate on equitys and such. Time to play!!!
    21 Dec 2011, 11:34 PM Reply Like
  • marpy
    , contributor
    Comments (1298) | Send Message
     
    I am sure that the EU banks have been given a good talking to by the ECB - we will help you out but you must in turn help us out as in by sovereign debt with a certain amount of the cheap money we loan you.
    21 Dec 2011, 05:22 PM Reply Like
  • JohnLocke
    , contributor
    Comments (381) | Send Message
     
    Loan money they don't have to countries who don't care if it is ever payed back...
    The ECB is backstopped by the U.S. FED for this insanity, how else did they come up with 650 Billion, of course just as in the case of the US QE experiment the money will sit in the banks coffers where they will in essence loan it back to the ECB, or it will simply be used to prop the European Markets.

     

    I wonder how much of the FEDS "Swapped" dollars will actually come back and buy US Paper? The USA will end up paying interest on our own loaned money...Classic!

     

    "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

     

    Thomas Jefferson
    21 Dec 2011, 08:01 PM Reply Like
  • Gregor_MacGregor
    , contributor
    Comments (79) | Send Message
     
    That quote is not Jefferson...would be funny if it was.
    22 Dec 2011, 05:57 AM Reply Like
  • carlprice
    , contributor
    Comments (30) | Send Message
     
    The ECB is unable to print QE money.....so Bernanke slips them a $650Billion line of credit deceptively calling it a "currency swap" so as not to piss us off. So absolutely ZERO money is printed.....just one entry of $650Billion credited to ECB entered into the FED's spreadsheet. What a CON game this is! The US/Fed just keeps creating liquidity from NOTHING but a spreadsheet entry with the guise that the ECB must pay it back.......YEAH!.....R... One day in the future just to keep us natives happy....the ECB will with a simple entry into their spreadsheet they will state $650Billion "paid in full". So, NO actual money is transferred both ways....thus NO Money was printed.......MAGIC!..... monetary liquidity crisis FIXED! What a game this is.....it works as long as the BLUFF is successful......then "POOOF"!.....when the "cat's out of the bag" the whole system collapses in the blink of an eye! ENJOY IT WHILE IT LASTS!
    22 Dec 2011, 03:05 AM Reply Like
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