Tensions rising in Franco-German relationship...

[Lord Beria3]

http://www.spiegel.de/international/eur ... 197-2.html

Sterdyniak is part of a group of economic experts critical of globalization who call themselves "économistes atterrés," or crushed or appalled economists, and are anticipating a possible crash landing of the euro. According to Sterdyniak, the monetary union was an "inane idea" from the very beginning, because it tied together what didn't belong together. He sees three possible scenarios for the future: implosion, decomposition or an emergency exit.

This is only a fragment of a longer article and I strongly recommend reading it for those who want to understand the changing dynamics between France and Germany.

Portillo on This Week remarked that Europe is akin to 1913 a month or two ago, and that appears similar to the historians warning of the similarities between the run-up to WW1 and the processes now going in the Euro crisis and the potential collapse of the single currency.

This time it is the markets rather than the railway timelines which are driving events.

[UndercoverElephant]

Mr Draghi can see another option...

http://www.bloomberg.com/news/2012-09-0 ... uying.html

To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, ensuring the program has a neutral impact on the money supply.

Eh?

I mean...why didn't somebody think of this before??

http://www.youtube.com/watch?v=4iiryJwvDtc

[PhilSage]

Mr Draghi can see another option...

http://www.bloomberg.com/news/2012-09-0 ... uying.html

To sterilize the bond purchases, the ECB will remove from the system elsewhere the same amount of money it spends, ensuring the program has a neutral impact on the money supply.

Eh?

I mean...why didn't somebody think of this before??

http://www.youtube.com/watch?v=4iiryJwvDtc

Wasn't it called the 'perpetual motion machine' or something?

[Lord Beria3]

UE - what is your verdict on the latest ECB plan?

[raspberry-blower]

http://www.zerohedge.com/news/one-chart ... fix-europe

[UndercoverElephant]

UE - what is your verdict on the latest ECB plan?

I don't understand it. Please explain how this latest round of money printing is going to be "sterilised"? All I see is a new buzzword, not a new plan.

The ECB has been left in an "impossible" position by the eurozone politicians.

ETA: In other words I think it is transparent desperation. The ECB *must* keep printing money, or PIIGS banks and governments will run out of money. They will find endless new names to call this, and go on doing it anyway, even though the Germans have told them not to. The Germans then have to decide whether they can stay in a eurozone that has descended into pure farce, or leave.

[DominicJ]

UE
All EU bond purchases have been sterilised, or at least the first few loads were.

"http://www.ft.com/cms/s/0/09f04938-f83f ... z25lLn55rz

Mr Draghi said the liquidity created through the bond purchases will be “fully sterilised”. What does this mean?

When the ECB buys government bonds, it creates cash to do so. Because of this, there is more cash, or liquidity, in the financial system than before the purchases were made.

Some members of the governing council have voiced fears that the liquidity added by the bond purchases could stoke inflation. In order to counter this risk, the ECB “sterilises” the bond purchases by removing the additional cash through the system.

There are two main ways in which it can do so. The first, used to “sterilise” its existing bond purchases, involves calling on banks to park funds at the ECB, on which the central bank will pay interest. The second is for the ECB to issue bills in exchange for banks’ cash.

There is some doubt whether sterilisation is effective in reining in inflation. But that is a question for another day – at the moment there is plenty of excess liquidity in the system, but relatively little inflationary pressure.

The issue of sterilisation is not particularly contentious. Mr Draghi revealed on Thursday that not a single member of the bank’s governing council had objected to sterilising its bond purchases. "

Basicaly, the ECB borrows money from a high street bank, and uses that to buy spanish bonds.
There is no "new" money, its disliked for good reason, because it starves none governmental sectors of funds.

The Fed and the BoE create new money, which risks inflation.

[UndercoverElephant]

There are two main ways in which it can do so. The first, used to “sterilise” its existing bond purchases, involves calling on banks to park funds at the ECB, on which the central bank will pay interest.

So the ECB lends the banks money, at 0.5%. But the banks have to "park" the same amount of money back at the ECB, which will pay interest? Don't tell me...the ECB will be paying 5% interest?

How is this not more smoke and mirrors.

The second is for the ECB to issue bills in exchange for banks’ cash.

I'm sorry, but I still don't understand. The banks in question are suffering capital flight. And this plan requires dump cash at the ECB?

There is some doubt whether sterilisation is effective in reining in inflation. But that is a question for another day – at the moment there is plenty of excess liquidity in the system, but relatively little inflationary pressure.

The inflation is coming. It will be let loose as people lose faith in their bank accounts.

The issue of sterilisation is not particularly contentious. Mr Draghi revealed on Thursday that not a single member of the bank’s governing council had objected to sterilising its bond purchases. "

Basicaly, the ECB borrows money from a high street bank, and uses that to buy spanish bonds.

Nope, still don't get it. Why doesn't the bank just buy Spanish bonds?

[SleeperService]

It's all rearranging deckchairs on the Titanic.

The very clever people who thought up these toxic debt packages are adding a twist and letting the fools buy rubbish at top prices, using their own money which is also earning them a hefty interest fee.

Think bankers extracting money out of the economy and into their retirement/renumeration pots.

[Lord Beria3]

http://www.marketoracle.co.uk/Article36389.html

The always interesting Nadeem perspective on the ECB money printing.

Stock prices soared today to stealth bull market highs in response to Super Mario Draghi igniting the euro-zones own Inflation mega-trend as he announced the O.M.T. (One More Try) proposal to print unlimited euro's to monetize the bankrupting euro-zone nation's debts (buy government bonds), in a very similar manner to the money printing quantitative easing that has fed the stealth bull markets in asset prices since the UK and US first announced their own QE programmes way back in March 2009, that I termed at the time as being Quantitative Inflation (05 Mar 2009 - Bank of England Ignites Quantitative Inflation ) which has subsequently manifested in economies such as the UK experiencing inflation of more than 15% despite economic stagnation.

The ECB's announcement was always inevitable and something that I have iterated at length over the years as illustrated by the Inflation Mega-trend ebook of Jan 2010 (Free Download) that warned that the Governments via their central banks have only one solution which is to print money and monetize government debt. Therefore investors need to protect their wealth from money printing inflation by exposing themselves to assets that have first call on inflation, and are leveraged to the inflation megatrend such as commodities, and consistently dividend paying and raising stocks and more recently this years convergence towards housing market bottoms such as the UK and US presenting one of those once in a couple of decades opportunities to climb aboard what still are embryonic bull markets, just as I strongly suggested the birth of a new multi-year stocks stealth bull market in March 2009 (Stealth Bull Market Follows Stocks Bear Market Bottom at Dow 6,470).

Regarding his call that the UK housing market is near its bottoms - this I do struggle with. I can understand why in the US since their housing market has seen a 60% crash and even Marc Faber - the uber-bear - is now positive about US housing.

But the UK has hardly seen any dent so I am much less convinced that we are on the brink of a decade long boom in UK property. If there is to be any boom, I would imagine it would be in the south-east, City led and geared towards homeowners with substantial equity in their properties or cash buyers like down-sizing boomers, rich *ankers and the afluent professionals within the City/home counties.