You can’t make this shit up. You’d think the economists and central over planners would’ve thought this out before embarking on an $89 billion per month bond buying bonanza. But Dgraghi and friends are now running out of things to buy and should be with dick in hand by February of 2017, maybe sooner.
This, of course, is good news for stocks and the riskiest of assets, as the degenerate central bank may be forced to up the risk profile on their purchases to include garbage, maybe even equities, a la Japan.
Monetary policy makers increased purchases of Irish and Portuguese bonds last month by less than it did for German debt, suggesting demand already threatens to outstrip supply from some countries. Banks say it might have to include more bonds or risk diluting the stimulus to the economy the quantitative easing is designed to inject.
“Everything is on the table,” said Richard McGuire, head of rates strategy at Rabobank International. “Whenever they meet resistance, they get around it by adjusting the rules, adjusting the limits or targeting new asset classes.”
Purchases at the moment are based on the size of a country’s economy and there are exclusions linked to debt restructuring. Rabobank estimates 1.13 trillion euros of bonds currently off limits could be eligible should the ECB change the parameters.
The Germans must be stroking out of this, with their so called ‘Austrian economics’ bloodlines. The fact that Germany is the largest economy in Europe means they’re the biggest buyer. Ergo, they will be buying the largest haul of crap assets soon, to further envelope the ECB in Mario Draghi’s madness.
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What’s so mad about this? The world needs inflation.
But these easing programs are unable to produce inflation due to secular economic stagnation.
Because they’re not ambitious enough…
There’s only so much demand that can be pulled forward. Once every room in the house has a TV, you don’t need any more TVs for a while.
The world needs inflation? Venezuela has plenty of inflation. How’s that working out for them?
There is no incentive for the PIGS to reform their fiscal economies. Shitty political figures will remain elected as the “Whatever It Takes” creates a fake economic fog. IMO, this is nothing but a short term fix that will make sovereign debt balloon. Germany embarked on economic reforms more than a decade ago and accepted the short term pain for the long term success. And now look, they’re about to get fucked by others who refuse to accept that their own policies are un-sustainable. This is all on the central bankers. Complete idiots.
*Hands ECB Resume and Job Application*
You’re on the right track I won’t subjugate you harshly. I refute the complete-idiot notion, I put that on the populace, CBs know what they’re doing and vs what they tell/told you; and, you’re a little late to the short-term-fix kick-the-can precept. 3. economic cycles are unescapable relating to debt, PIG reform would never have worked, only resets & purges. Now that you’re caught up Welcome
So you think buying all their own companies is a good thing? How is it working out in Japan?
Since I refuse to study anymore for the CFA. What about student loans, a ridiculous process. Are you telling me that a double major in Economics and Finance from a top 20 business school in the country pays the same interest as a Theater major? Or a 3.9 GPA student has the same loan as a 2.3 GPA student?
Plus, there is no incentive for the University or the professors to get their students full time jobs to pay off the loans. They already got their money and it’s on to the next class. Student loans should be given through the school or atleast have the school accountable for a student default.
“Student loans should be given through the school or at least have the school accountable for a student default. ”
This is actually a brilliant idea, especially for a society in love with “market forces.” It gives skin in the game, especially useful for those for-profit degree houses. That way they’ll think more about what degrees to offer and in what quantity.
Also, with half the population with below average intelligence, and 70% of jobs completely do-able without degrees, there’s no need to be pushing these things as hard as we are. The Millenials are finding this out the hard way.
PS I *do* think that every degree is useful, but the marginal cost often exceeds the marginal utility.
Where is this table that everyone talks about? How do we know there isn’t already too much stuff on the table and won’t cause table legs to collapse?
As fly’s headline insinuates, a fair amount of buying is from govs. govs/CBs/whatever. Boj directly with nikkei etfs/yen and ecb and fed programs all over the place. You all kinda disregard it in your “wide eyed optimistic views” of rally days(weeks) (and where they come from)
The germans are watching Deutsche Bank get nuked into the lehman abyss
I thought you would love this article http://www.businessinsider.com/r-bayer-could-get-ecb-financing-for-monsanto-bid-rules-show-2016-5
That is exactly why I closed off my HYG short (and will not re-enter unless ECb stops buying – so never).
Also, notice this: “Central bank sources told Reuters that it would not be the ECB’s first choice if the money it spent ended up financing acquisitions. But even this would have a silver lining if consolidation made an industry or sector more efficient and if it gave fresh impetus to the stock market, the source added.”
In order words, virtual-monopolies are okay as long as they help boost the stock market. Not sure Trump’s and Bernie’s supporters would see it the same way.
BTW, looks like they are also buying Greek bonds. The IMF also back down from demanding immediate debt relief on Monday. The concession:
“We had argued that [debt relief measures] should be approved up front and [now] we have agreed that they should be made at the end of the programme period (with no terms for debt relief in writing)”
– Poul Thomsen, director of the IMF’s European programme
http://www.theguardian.com/world/2016/may/24/eurozone-officials-hope-to-give-greece-next-tranche-of-bailout
In other words, in return for IMF backing, Germany formally agreed with the IMF that Greece is screwed and can’t pay it’s current debt.