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Same, same in the USA, ane we only have one federal government to blame, along with 1 1/2 parties and a bi-partisan consensus regarding fairy-tale economics.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 14th, 2016 at 10:33:31 AM EST
[ Parent ]

Frank Schnittger:

However the only reason we are even having this conversation is that the ECB appears to be the only EU institution which is even trying to take some responsibility for ensuring economic recovery.

With monetary stimulus, while actively preventing fiscal stimulus in the perifery of the EU.

by fjallstrom on Mon Mar 14th, 2016 at 11:27:59 AM EST
[ Parent ]

True, but as with any bank, its primery responsibility is to protect their own money. Fiscal stimulus is a responsibility of the EU Council as representative of member state Governments, and they ain't going to go down that route either in Greece or in their own countries, largely for ideological reasons.

However there is some limited good news. As Krugman never tires of pointing out, the deflationary impact of Government cuts is proportional to the rate of change of Government expenditure. EU Governments may not be spending much, but most aren't further cutting their expenditure, and thus the economic impact of their parsimony is petering out. As Ireland (and to a lesser extent) other peripheral EU states have shown, economic growth can recover quite quickly (off a much lower base) once the rate of change of cutbacks in Government spending declines.

And while QE and zero interest rates has the unwanted effecting of boosting asset price inflation in growing EU economies, it does at least have the effect of improving the sustainability of Peripheral sovereign and private debts and reducing asset price deflation in those economies.. You might say, just balm for a basically unsustainable and unjust situation, but central banks don't do morality.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Mar 14th, 2016 at 12:19:24 PM EST
[ Parent ]

QE boost asset prices in stagnant economies as well, and, even for those growing under QE, the growth, maybe 2% at most, is dwarfed by the increase in asset prices which further exacerbates wealth disparities and increases the burdens on all who don't own through higher rents.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Mar 14th, 2016 at 03:45:27 PM EST
[ Parent ]

Re: ECB, wtf ? (4.00 / 3)

But in the case of Greece, in particular, and bombed out economies in general, the effect of QE is to minimise the complete freefall of asset prices which could facilitate the takeover of assets by external vulture funds etc. - not that that hasn't been happening to some degree in any case. The ECB can thus play some beneficial role in helping an economy like Greece whilst similtaneously pissing off net creditor countries like Germany - "the ECB is playing around with OUR savers' money..."

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Mar 14th, 2016 at 04:25:37 PM EST
[ Parent ]

Frank Schnittger:

The ECB can thus play some beneficial role in helping an economy like Greece whilst similtaneously pissing off net creditor countries like Germany - "the ECB is playing around with OUR savers' money..."

Well...

Mario's dangerous game with the German savers' money.

by Bernard (bernard) on Tue Mar 15th, 2016 at 04:16:55 AM EST
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LOL. Hadn't seen that..!

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Mar 15th, 2016 at 04:56:44 PM EST
[ Parent ]

Does it even matter that the ECB has good intentions when they keep pulling the same austerity and income inequality levers expecting different results?

Draghi's spreading enormous gobs of peanut butter fresh from the fiat grinder onto one tiny corner of the bread slice, and wow - amazing - the poor get poorer and the rich richer. Who'd a thunk it?

Of course he's just the kinder, gentler mouthpiece for the others he speaks for!

The only way out is citizen's income and they will conjure every trick in their voluminous book before they even do more than 'think' about it!

Every other option must be laboriously taken before finally yielding, so avoid admitting There Was An Alternative all along, the last 50 years have been a socioeconomic clusterfuck and they will all wail "If only we could have seen it sooner", like Greenspan's rueful nopology.

Their Ponzi scam is running on fumes, bad faith, and the flogging of a dead dinosaur trying to get it to 'grow' again like back in the day before Asia ate our industrial lunch, abetted by our own plutocrats.

Draghi dreams of renewed economic euro-vigor by trickle-down theory, when after killing economies there are no more competitive businesses for banks to loan to and realistically expect more than a few % return if lucky to get anything at all.

So it's impasse, stalemate, and oh yes, the right people are continuing to profit while we patiently explore any and all regressive, recessionary measures to continue to pretend that tinkle-down solutions will eventually work.

Sure, Marco... keep QE-ing. (GS trained you well.)

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Mon Mar 14th, 2016 at 11:30:56 PM EST
[ Parent ]

I think the main benefit of Mario's policies is that the ultra low interest rates help net debtor countries, firms and individuals and annoy the creditors who want an easy way to make money. Everything else is a bit like pushing on a rope: the rope may coil up in bank vaults, but it isn't doing much of anything in the real world. Even asset price inflation is caused more by "investors" buying in desperate search of a return because their money in the bank isn't doing much of anything for them.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Mar 15th, 2016 at 05:02:40 PM EST
[ Parent ]

May it also not be due to bank secrecy as to their obligations when their bad bets come due?

That confidence fairy has to keep spinning to stay vertical.

The real numbers would scare the people into mass panic, the Charybdis to the CD swaps' Scylla. So Draghi's can kicking gives time for Godot to show up (and his buddies to get their cash out of Dodge).

OT, but is Trump against TTIP?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Mar 15th, 2016 at 11:29:17 PM EST
[ Parent ]

OT, but is Trump against TTIP?

AFAIK Trump has made anti-free trade noises - "exporting our jobs" - because its a populist thing to say. Not sure that is any guide to what he would do.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Mar 16th, 2016 at 07:45:53 AM EST
[ Parent ]

It is highly risky to go into debt even with negative interest rates in this economy. Singing how the low rates benefit debtors and discourage creditors is a fallacy. Under deflation, the creditors have the power to squeeze debtors badly while living comfortably. The game now is not financial returns but materializing your financial positions. Asset grab, baby!

by das monde on Wed Mar 16th, 2016 at 12:40:45 AM EST
[ Parent ]

Which is why countries, companies and individuals are all doing everything they can to reduce their net debt positions even though interests are so low and why the ultra low interest rates and QE are having so little stimulative effect on real economies or on inflation. With everyone repaying their debts, banks and vulture funds have to find somewher else to put their money.

The main reason Ireland's budgetary position has improved so much is that its interest costs are way below budgetary expectations which has in turn helped Ireland to reduce its debt/GDP ratio from 121% to 95% in just 3 years.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Mar 16th, 2016 at 07:55:26 AM EST
[ Parent ]

Elite Bankers LOVE deflation. After the US Civil War Morgan was allied with the Rothschilds of London and had access to vast reserves of gold. They contributed, bribed and agitated to retire the Greenback Dollars, which produced deflation, and then their agents proceeded to foreclose on most of the loans they had made, thereby pocketing the profits already made plus the assets against which the loans had been made. It was the financial basis for the creation of the Southern term "Carpetbagger", and Carpetbaggers were protected by the Union Army and Reconstruction state governments. That is part of the dark side of Reconstruction.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Mar 20th, 2016 at 11:49:13 AM EST
[ Parent ]

Whatever "Gone with the Wind" might preach, the aristocracy was in serious financial difficulty before the war, but after the war it managed to regain economic control, thanks to large injections of Northern and British capital. With renewed economic power came a return of political power, even before the end of Reconstruction, which simply finished the job. I highly recommend a book titled "Ballots and Fencerails", which focuses on Reconstruction in the Lower Cape Fear in North Carolina.

by rifek on Mon Mar 21st, 2016 at 10:41:58 PM EST
[ Parent ]

Well, there's the thing. He IS contemplating "helicopter money". That does not equate to "citizen's income", but anyone but a trained economist would know that it's the most efficient way to deliver it.

I was hoping that someone would come up with ideas as to how the ECB could actually deliver money to actual people, presumably over the heads of their government.

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Wed Mar 16th, 2016 at 02:40:18 AM EST
[ Parent ]

Perhaps it will look like this? (none / 0)

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Thu Mar 17th, 2016 at 09:36:16 AM EST
[ Parent ]