-1.58% to 5.09%
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i’ve been thinking about that. the ECB has initiated some level of QE. They have the power to stabilize all of this and send those yields down to anywhere they want … gov’ts have the power to prevent our own demise, the downside is that while we have a clam, he can’t use fiscal policy (which is what is really needed) unless he gets very creative (see my comments last night).
However, monetary policy could stabilize europe which could sure help. all they have to do is buy bonds of afflicted countries in enough quantity or, probably, in low quantity if they announce a target interest rate, and they can stabilize the problem IF the problem is worry over bank balance sheets. Further, they wouldn’t lose ten cents if they bought bonds at 10% and then charged 2% interest on what they paid, effectively monetizing debt and potentially ending the crisis without “printing any euros”.
I know it was massively misunderstood, but QE does not add any dollars to the economy and actually subtracts them (as interest is not paid to any private party on those bonds but to the government itself). QE will not cause hyperinflation, and the europeans possess the ability to stabilize this situation fairly easily.
I think the time to buy into the rally, short some leveraged ETFs, and all of that, is when a definitive action is taken by gov’ts on at least their and possibly our side of the swamp.
Its not “money printing” in that it would net add no dollars to the european economy in the end…