"ECB enters uncharted territory with new stimulus" by David McHugh | Associated Press June 06, 2014
FRANKFURT — The European Central Bank ventured into uncharted territory Thursday with a raft of unusual measures meant to revive the eurozone economy by getting credit flowing to companies and preventing a debilitating bout of deflation.
The ECB was spurred into action by evidence that growth in the 18-country eurozone is too weak to keep consumer price inflation at a healthy level. The fear is the low inflation will last or, worse still, become an outright drop in prices that, if sustained, could snuff out what little growth Europe has.
Expectations were high for the central bank to show it would act to prevent such a scenario after months of hesitation in which the inflation rate kept falling. The last measure, for May, showed inflation was only 0.5 percent, far below the bank’s goal of 2 percent.
These guys want to blow up the balloon again so they can get rich!
Related: A New World Power
The ECB’s 24-member governing council finally struck on Thursday, announcing a package of measures that included interest rate cuts, including lowering one rate into negative territory for the first time.
What does that mean, because it LOOKS LIKE what they did in long-forgotten Cyprus, and that is $KIM $AVINGS ACCOUNTS in what I call $TEALING!
On top of that, it promised billions in cheap loans for banks on condition they lend more, and announced a new program to use financial markets to round up more cash for companies.
Here’s a look at what the ECB did and why.
Q. What’s the ECB worried about? Why all the drama?
What a horrible question, why all the drama.
A. Low inflation, and the danger that it becomes a habit. People might start postponing purchases because they think the prices of goods will fall. That’s deflation, a trap that is hard to get out of.
I don't want to burst your bubble, but we aren't buying because we have no money. That goes for Europeans as well as us. The 1% took it all. Sorry.
Q. What is the ECB trying to do, in a nutshell?
A nut$hell. Sigh.
A. It aims to get banks to loan more money at affordable rates, especially to companies in the countries, such as Spain and Portugal, that were hit hardest by the recent economic and financial crisis. Without those loans, companies can’t invest and create jobs and consumers can’t borrow to buy homes and goods.
Look how the $elf-$erving, $elf-internalized banker values have taken hold. The a$$umption their is that endle$$ debt en$lavement is somehow good for economic growth when the exact opposite is true.
Q. So what did the ECB do to achieve that?
A. First, it cut its benchmark interest rate, the rate at which it loans to banks. In theory, banks pass that rate on to companies and consumers by making their loans cheaper. The rate was already at a record low of 0.25 percent, and lowering it to 0.15 percent will help only a bit.
Of course, in theory -- well, no, in fact actually -- that is what was behind the LIBOR scandal and the goodies were not passed along.
So the bank did more. It cut its deposit rate to minus 0.1 percent, a very unusual and untried step.
In effect, banks will pay a penalty — negative interest — if they leave money at the ECB. It’s an incentive for them to lend it out, instead. No one’s sure it will work. It was tried in Sweden and Denmark but has not been used in an economy as big as the eurozone’s.
Are you tired of the central bank $hell game yet?
Q. Is that all?
Good question (pfffft)!
A. The ECB will also offer targeted, ultra-cheap loans to banks on condition they lend to businesses. That means the more the banks lend, the more cheap cash they can scoop up from the ECB. The banks would have a secure source of cheap cash to do business with — on the condition that they risk some of that money as loans. The size of the program was not determined Thursday, but it is likely to be significant — some $543 million.
What is to stop them from keeping it like all the Wall Street firms did here?
Q. That’s it?
The reporter must not want to be doing this. he wants to get it over so he can go do whatever I guess.
A. There’s more. The ECB will stop taking weekly deposits from banks in connection with an earlier stimulus program of bond purchases. It’s a bit technical, but the bottom line is that it will leave an extra $237 billion in the financial system.
I can hear the drool coming off the banker's chin dropping to the floor and puddling.
It is also going to do ‘‘preparatory work’’ on buying packages of bank loans to small business in the form of bonds. The idea is to encourage banks and financial institutions to create such bonds — for which, of course, they need to make loans.
In other words, they want to BUNDLE the same type of collateralized debt obligations that were behind the mortgage-backed $ecurities $windle and then buy them back themselves like the Fed! What a $elf-$erving $cam and fraud!
Q. Did the ECB do enough? Will it raise inflation?
A. Markets greeted the measures with a burst of euphoria — Germany’s DAX blue chip index broke 10,000 for the first time in its history. But the immediate market impact faded quickly. Some investors want more details on these programs to understand how effective they will be.
Translation: the same failed measures are not convincing anyone.
Many economists also note that the ECB did not do what would have been most effective — buy large amounts of financial assets, such as bonds, to pump newly created money into the financial system. That is called quantitative easing.
That FAILED HERE -- unless you view the FURTHER CONCENTRATION of WEALTH in the 1% of the planet due to an inflated $tock market a $ucce$$.
Other central banks, such as the US Federal Reserve, have done just that, but it is more complicated in a currency union with 18 members.
Yeah, those countries are not captive to a private central bank like the U.S.
Draghi appeared to leave such action as a possibility, saying that ‘‘if need be, within our mandate, we aren’t finished here.’’
Analyst Richard Barwell at Royal Bank of Scotland said comments like that mean ‘‘expectations of a broad-based asset-purchase program will rapidly start to build.’’
More $elf-$erving $will from the $phincter bank$ters!
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