Another day another step closer to full on QE on a global scale.
In America observers have been calling it QE light. When in fact is has been anything but. The POMO operations (where the Fed buys ‘assets’ for cash, thus putting new Cash into the system) have been pumping billions into the markets each week.
But it is now clear that billions per week is not going to be enough. Now that the recession is over we need MORE stimulus and more bank rescuing.
In Europe things are no better. Spain’s Prime Minister declared every thing is now fine. In response Spain’s largest bank lost 2.5% of its share value. And was downgraded by Credit Suisse who have only just increased their holding in it. Could that have anything at all to do with the collapse in construction story?
Portugal had a bond auction. At which it was desperate to sell at least 750 Million euros, but hoped for up to 1 Billion. Desperation ruled and they managed to scrape only the minimum and only by paying a full percentage point more than they did at the last auction.
Ireland also sold some bonds. 1.5 billion of them. Not bad when Ireland had to be rescued by the ECB after Ireland was warned it was at risk of a downgrade even on it’s covered bonds. Supposedly the ‘safest’ of bonds. The ECB stepped in. But today, in addition to having the ECBguarantee its longer dated debt, the ECB also had to extend it temporary support (now in its second year I believe) for even Ireland’s 3 month debt. The cost of insuring Irish debt, even with this ECB guarantee, rose today.
Makes you wonder who exactly bought the bonds Ireland sold the other day? ECB anyone?
ECB officials were saying only the day before yesterday that they thought no country might ever actually need to draw on the huge European bank rescue fund, the EFFSF (European Financial Stability Fund) . Today that statement looks even more foolish than the moment he let it pass his lips.
It won’t be long before Ireland puts out its hand. They have already been bailed out directly this week, had have and extension of ECB guarantees on even their ‘lend us a tenner till tomorrow’ debt and are watching as CDS costs on their debt continue on up.
Not long now till QE2. Now its a matter of balancing financial desperation against political cost.
totally ominous drum roll for george and the public spending review, especially with ira offering the prospect of acts against the bankers
Which bank(s) do you think the IRA and its Real and Continuity sub groups bank with?