EU could have QE by next month

Masomnia

carslet wrote: »

Announcement soon that they are going print 500bn euro

European Central Bank staff presented policy makers with models for buying as much as 500 billion euros ($591 billion) of investment-grade assets, according to a person who attended a meeting of the Governing Council.

Agreed while Merkel was off visiting Britain?

worldtraveller

The European Central Bank will be forced to boost its balance sheet to €4.5 trillion in a colossal monetary blitz to prevent deflation engulfing the eurozone, economists at RBS have warned.

The figure is the most aggressive forecast issued so far by any major bank and implies quantitative easing (QE) of at least €2.3 trillion, two or even three times the level suggested so far by ECB officials.

The RBS report, entitled “Deflation Motel: you can check in, but you can’t check out”, said the buying spree will drive 10-year yields to near zero or even lower in the core countries........Regardless of the economic effects, RBS said even the first tranche of QE will be enough to set off a further a dash for bonds and flood global markets with enough liquidity to keep the asset boom going as the US Federal Reserve steps back. RBS advised clients to buy “everything”, except for commodities and Asian assets.

The Telegraph

IMHO, I disagree with them on commodities and have been drip-feeding into a fund whenever it drops to a certain level. This is, however, a medium/long term strategy on my part, since the longer commodity prices are depressed, the more they will react later due to production lag.

wotsthat

“On Thursday, the ECB will take the decision to buy sovereign debt, which will provide significant liquidity to the European economy and create a movement that is favourable to growth,” Hollande said in a speech to business leaders at the Élys!e Palace.

http://www.digitallook.com/news/international-economic/ecb-will-unleash-qe-on-thursday-says-french-president-hollande--642653.html

Good to see Hollande announcing the ECB's decision before they've even made it. Draghi must be delighted.

carslet

So what will happen now, are we all saved?, will the euro tank vs pound?

worldtraveller

Eurozone stocks have been boosted by reports that the ECB may launch a bigger stimulus program than expected, while British equities have moved higher on falling unemployment.

In recent days some analysts have suggested that the ECB's QE program could include at least 500 billion euros ($A750 billion) of government debt and up to 250 billion euros of other non-financial corporate debt.

But a report on Wednesday by Bloomberg said the ECB's board had drawn up a proposal to buy 50 billion euros of sovereign bonds per month until the end of 2016, an injection that would be worth 1.1 trillion.

skyNEWS

There's been so much rumour going around for the past week, or so, and some significant pushing up of the QE stakes by some analysts. Will it be a damp squib and a classical case of "Buy the rumour, sell the fact"? :think:

Maybe the ECB have several scenarios pencilled in, the final decision to be based ultimately on market sentiment? Can they afford to apply something that could be, as stated above, a damp squib, and thereby cause a big sell-off?

A lot of questions I know.

Let's see tomorrow. It will probably be an interesting day/few days on the markets, whatever happens.

C_Mababejive

How is it that banks can print as much fake money as they want to but if i print any,they get annoyed?

Thrugelmir

worldtraveller wrote: »

There's been so much rumour going around for the past week, or so, and some significant pushing up of the QE stakes by some analysts. Will it be a damp squib and a classical case of "Buy the rumour, sell the fact"? :think:

Maybe the ECB have several scenarios pencilled in, the final decision to be based ultimately on market sentiment? Can they afford to apply something that could be, as stated above, a damp squib, and thereby cause a big sell-off?

Will ECB QE suddenly wake up the likes of the social network sheeple, that don't yet have any idea about this latest situation, and suddenly boost Europe/Eurozone investment?

A lot of questions I know.

Let's see tomorrow. It will probably be an interesting day/few days on the markets, whatever happens.

QE doesn't address the fundamental issues that the EU faces. Greek unemployment is approaching 26%. Printing money doesn't change this fact.

worldtraveller

Thrugelmir wrote: »

QE doesn't address the fundamental issues that the EU faces. Greek unemployment is approaching 26%. Printing money doesn't change this fact.

I don't disagree with you, it's largely just giving a fresh label to that very rusty old can that's been kicked down the street for some years now!

Generali

Thrugelmir wrote: »

QE doesn't address the fundamental issues that the EU faces. Greek unemployment is approaching 26%. Printing money doesn't change this fact.

It is hard to see how reducing 3 year Italian bond yields from 1.85% to 1.7% will make much difference to anything.

The individual Eurozone countries need some pretty drastic supply-side changes to their economies Thatcher-style.

That they make it effectively impossible to take on young employees is a continent-wide disaster.

Thrugelmir

Generali wrote: »

The individual Eurozone countries need some pretty drastic supply-side changes to their economies Thatcher-style.

Much of Europe requires structural reform of some kind. Reformation of the public services as well. QE is akin to fiscal unity via the back door. Whether the wider electorate will agree to the policy is another matter.