Draghi’s Deadly Derangement ~ Yes, the man is totally deranged, and so is the entire eurozone policy apparatus. Like much of officialdom elsewhere in the world, the ECB is attempting to fight low growth and low inflation with monetary nitroglycerin. Its only a matter of time before they blow the whole financial works sky high. – David Stockman
Draghi’s bazooka fails to turn eurozone tide:
Noticed anything about press coverage of Mario Draghi lately? The European Central Bank president is no longer “Super Mario” and seems to have mislaid his “big bazooka”. The epithets and weaponry are receding as fast as his powers.
The ECB’s last meeting in December, when Mr Draghi under-delivered on promised policy easing, explains why the lustre is lost. Investors took it badly, and the euro soared 3 per cent — its biggest one-day rise in six years. A competitive currency, which Mr Draghi needs to revive the eurozone economy, remains elusive.
Has the market learned its lesson? Probably not. Since mid-February, the euro is down around 3 per cent but that leaves the stage set for another dose of policy disappointment, followed by the inevitable bounce.
How quickly things have worsened since December. Policy divergence from the US was meant to drive the euro towards dollar parity and bolster inflation. However, while his Federal Reserve counterpart Janet Yellen raised rates, Mr Draghi could not keep to his side of the equation.
Market turmoil has done the euro no favours. Uncertainty drives investors to havens, and the euro is one of them, while euro-funded carry trades have been unwound. Meanwhile, the market blew a raspberry at the Bank of Japan’s negative interest rates, blunting sentiment towards one of the ECB’s few remaining policy tools.
Quantitative easing, the policy that made Mr Draghi’s reputation, looks spent. Sure, the euro has fallen by a quarter since mid-2014 when QE first crossed Mr Draghi’s lips. But inflation has stalled, Germany has slipped back into deflation and growth is painfully slow.
“Buying gold is just buying a ‘put’ against the idiocy of the political cycle. It’s That Simple” ~ Kyle Bass
Where does that leave the euro? Higher, at $1.16 by midyear, according to BNP Paribas. With investors less likely to seek higher returns abroad in a climate of risk aversion, a healthy surplus is likely to prop up the currency.
Perhaps the ECB should cut its losses and accept that a 25 per cent euro depreciation over two years is not a bad outcome. There are other threats, such as the migrant crisis and Brexit fears so, if the euro comes out of the ECB meeting broadly on trend, that may have to suffice.
The only way to get euro weakness is for the Fed to deliver a faster cycle of interest rate rises. Perhaps Mr Draghi should hand his bazooka to Ms Yellen — if he ever finds it.
- Riots Erupt In Germany As Attempt To Shut Down Rothschild’s European Central Bank!
- Breaking France: Entire Swiss Branch Of Rothschild’s Banking Empire Under Criminal Investigation Following David De Rothschild Conspiracy Indictment.
JP Morgan, Goldman, ? Said to Discuss Buying Deutsche Bank Swaps:
This week begins the 2nd half of March  and the lead in to massive 1st quarter bank write-downs. The Rumors of the Deutsche Bank Derivative Implosion have been confirmed by the pending sale of $1.1 TRILLION in derivatives to the “3 Horsemen” of the USA derivative implosion: JP Morgan, Goldman Sachs and Citigroup.
Did you notice how Citigroup is a bidder ~ but was left out of the title of the Bloomberg article?
That’s because this deal will put the American TAXPAYER on the hook for another $1.1 Trillion in toxic derivatives!
All of which will have to be paid out BEFORE the FDIC pays out any other insured deposits including YOUR checking and savings accounts!
Listen to WHY the 1st quarter write-downs will be so devastating here: Mass Awakening Followed By Chaos
- Shanghai Shock April 2016: Yuan Based Gold Standard.
- New Gold Bull Market Now Official; Breaking Point in Paper Gold?
- What Energy Bankers Are Really Saying: “We Are Looking To Save Ourselves Now”
- Energy CEO Aubrey McClendon Suicided 24 Hours After Indictment: Major Threats To Deluded Elite’s Energy Agenda
- German Police Officers Take Off Helmets & Marched With German Citizens Against Rothschild European Central Bank ~ Validated.
- Deutsche Bank Declares War On Rothschild’s Central Bank President Mario Draghi, Warns Him Any Further QE Will Push Stocks Lower