Is the end nigh for the Euro? [vol. 3]
Discussion
Andy Zarse said:
What's the flipping point of the Bundesbank buying bunds @ 5yr negative yield or 10yr yielding 0.50%? How will it help? Anyone?
Will that is the 50Bn per month euro question!! There is a school of thought that has QE just causing asset bubbles and that the money does not really going into the real economy. Has all the QE done here actually helped much ???number 46 said:
Will that is the 50Bn per month euro question!! There is a school of thought that has QE just causing asset bubbles and that the money does not really going into the real economy. Has all the QE done here actually helped much ???
Both fair questions. Is there any evidence that QE did anything for the real economy outside the DOW?I'd say there's a sound argument that the increase in the velocity of money thanks to improved confidence had more to do with it.
Art0ir said:
number 46 said:
Will that is the 50Bn per month euro question!! There is a school of thought that has QE just causing asset bubbles and that the money does not really going into the real economy. Has all the QE done here actually helped much ???
Both fair questions. Is there any evidence that QE did anything for the real economy outside the DOW?I'd say there's a sound argument that the increase in the velocity of money thanks to improved confidence had more to do with it.
Here's what the various banks are expecting:
Frankly I reckon it's a mugs game to second guess such things, but I do wonder if Deutsche Bank might not be right? There's be a lot of egg on face!
It would seem reasonable that any QE is going to be big. By the time you have got to here, getting the agreement in place is the difficult bit, so you might as well go big.
I posted two weeks ago that 500m Euro was the likely size, and most on here said it was too small (but then I hear that a lot)
So I will say it will be over a Trillion. I mean, if you are going to go to the land of make believe there is no point imagining yourself driving a Mini when you get there. You may as well go for a full Rolls Royce, since you a making s
t up. Oh, and the Today program this morning had an interesting take on QE. Especially in light of the idiocy posted above where Germany gets to buy cheap things slightly cheaper.
The US QE largely had an effect of banks taking the bond and investing in emergin market assets where the returns are greater. Hence the currency issues for some when QE was withdrawn and the rapid strengthening of the dollar.
This "overspill" effect, might mean that all those Euro's swilling around, may actually end up invested in India, Brazil or any other Oil importing country, where right now it is BOOM time.
Gargamel said:
The US QE largely had an effect of banks taking the bond and investing in emergin market assets where the returns are greater. Hence the currency issues for some when QE was withdrawn and the rapid strengthening of the dollar.
QE is, at very best, a massively blunt instrument for stimulating an economy. Experience in the UK and USA would suggest it is best at inflating asset prices.The lowest of low rates are only ever enjoyed by very wealthy individuals or corporations (who tend, as you rightly say, to use the borrowings to invest in assets) and the effect is, as many protest, a widening of the wealth gap.
All that said, Fred Karno's army, a.k.a. the ECB will go big, IMHO.
Digga said:
Gargamel said:
The US QE largely had an effect of banks taking the bond and investing in emergin market assets where the returns are greater. Hence the currency issues for some when QE was withdrawn and the rapid strengthening of the dollar.
QE is, at very best, a massively blunt instrument for stimulating an economy. Experience in the UK and USA would suggest it is best at inflating asset prices.The lowest of low rates are only ever enjoyed by very wealthy individuals or corporations (who tend, as you rightly say, to use the borrowings to invest in assets) and the effect is, as many protest, a widening of the wealth gap.
All that said, Fred Karno's army, a.k.a. the ECB will go big, IMHO.
The only person I wish would call by here today is good old Ozzie Osmond! He always boasted the benefits of the Euro meant they'd never need such humiliating and devaluing tactics as QE, and that the Eurozone would march relentlessly into the sunlit uplands...
Some interesting comments about a number of things including Central Banks from an American bloke (Jim Rogers) who is presented as a top investor.
http://www.dailymail.co.uk/money/markets/article-2...
http://www.dailymail.co.uk/money/markets/article-2...
LongQ said:
Some interesting comments about a number of things including Central Banks from an American bloke (Jim Rogers) who is presented as a top investor.
http://www.dailymail.co.uk/money/markets/article-2...
I thought that name sounded familiar. I read a book by him ages ago about his round the world motorbike adventures. Investment Biker.http://www.dailymail.co.uk/money/markets/article-2...
fido said:
Isn't that what them into trouble in the first place .. spending money they didn't have!
What Maffski is proposing is actually quite similar to the Investment Biker. Don't go for QE and give it to Investment Bankers, give it to the plumbers in Hamburg
A fiscal stimulus (such as QE) always goes to people who already have money. Thus giving it to say 10m Europeans as a voucher to go on holiday in Spain, Italy or Greece, would increase travel, Tourism, demand, prices, and provide a living for Greece.
Alternatively you could cut VAT by 5% across the Eurozone, and not bother printing any more debts....
Digga said:
QE is, at very best, a massively blunt instrument for stimulating an economy. Experience in the UK and USA would suggest it is best at inflating asset prices.
Really? UK House prices outside of London are at or below pre bust levels, and London itself has seem house price inflation for a number of reasons most of which have absolutely nothing to do with QE and more to do with Global security. I think given where we might well be without QE ( look at the EU for an example ) it can be judged to have been a massive policy success.
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