QE, or not QE?

King WEIDMANN and Lord SCHAUEBLE have arranged for DRAGHI to converse with ANGELA.   They withdraw to observe the conversation.




QE, or not QE: that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous markets,
Or to take arms against a sea of troubles,
And by easing end them?   To buy: to sleep
At last; and by a sleep to say we end
The heart-ache and the thousand natural shocks
That Europe's heir to, 'tis a consummation
Devoutly to be wish'd.   To buy, to sleep:
To sleep: perchance to dream: ay, there's the rub;
For in that balance sheet what dreams may come
When we have synthesized this fall in oil,
Must give you pause; there's the respect
That makes us act in economic strife:
For who would bear the whips and scorns this time,
The oppressor's wrong, the German's contumely,
The pangs of lower price, the law's delay,
The insolence of office and the spurns
That patient demerit of the unworthy takes,
When he himself his quietus make
With a buy ticket?  Who would Merkel bear
To grunt and sweat under a weary life,
But that dread of debt until death,
The undiscover'd country from whose bourn
No economy returns, puzzles the will
And makes us rather cure those ills we have
Then fly to others that we know not of?
Thus deflation does make radicals of us all;
And thus the native hue of resolution
Must triumph o'er the pale cast of thought
And enterprises of great pith and moment
With this regard the current turn awry,
All in the name of action--Soft you now!
The great Angela!  Frau, in they orisons
Be all my buys remember'd


Good lord, what are you on about, love?   Das ist nicht gut.  Karlsruhe, please pick up the white courtesy phone.  Karlsruhe....
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December 4, 2014 at 9:10 AM ×

C Says
One doesn't need to be a seer to see markets have been pricing optimistically coming into this ECB meeting. I dare say if it pleases we'll see an immediate spike. However, as usual the issue then becomes how much has already been priced in? God , I have to admit I hate buying 'news' on this basis. I'd usually rather sell the immediate response.

December 4, 2014 at 10:12 AM ×


Cultural tangents notwithstanding, this be where I'm at today.

December 4, 2014 at 11:46 AM ×

Nice linguistics MM! This is true modern Shakespearism. What shall it be. SovQE? Corporate QE?

Perhaps we already saw a small glimpse of the strategy chosen to be executed within the EU. There was a post in Polemics blog, which was called the magic money multiplier, ie. trying to use the old clogged up banking channels for pushing out SME loans to fund the supposed future public sector investments, accomplished through these SME's. Or was it rather related to SME loan "guarantees". Large corporates probably don't have too much difficulty in drawing loans right now, so no change there.

SovQE, what's the point with yields so low already? Nation states may currently spend and revive all they want, but unfortunately they have not had very much success to generating GDP growth.

If we had a poll, I would vote something with a somewhat disappointing result for the market expectations. But then again who knows, I'm no expert and there might be all sorts of other kinds of tricks to pull out of the hat. But presumably something similiar to a "full blown" US style QE is what is at expectations here?

December 4, 2014 at 12:18 PM ×

I wouldn't expect anything more than vintage draghi - i.e. find 50 new ways to say 'whatever it takes' without doing anything right away.
The 'priced in or not' issue is more perplexing - I do not know a single punter who doesn't share the above view of the ECBs words to action ratio, but yet market price action says otherwise.
We will find out soon enough I suppose.

Mr. T
December 4, 2014 at 1:46 PM ×

With recent German weakness I think we are seeing the last impediments to a much more aggressive ECB. Draghi knows this, will be smirking his way all across Europe on his scorched-markets strategy of 'the stimulus will continue until morale improves' campaign.

This whole charade is just so disappointing, but you go to war with the market you have, not the one you want.

Peripheral convergence, long eurostoxx, short euros, etc. This is what King Draghi demands.