I don't know how I feel about central bankers just cranking up the printing presses. But Ambrose Evans-Pritchard certainly applauds the European Central Bank doing so:
Two key governors tipped us off today that the bank is ready to buy assets
outright on the open market, including mortgage debt. This is a huge
development, exactly what is required to help restore the animal spirits of
global investors.
Until now the ECB has offered unlimited liquidity in exchange for collateral from banks. That is not the same thing at all. It is sterilized stimulus. The bank has adamantly refused to cross the Rubicon by scattering money through the economy in real blast of QE. (quantitative easing)
ECB is clearly alarmed by the outright contraction of credit. Loans to non-financial corporations fell in February (minus €4bn).
Yet further down his enthusiasm tempers:
Sadly I have little confidence that the ECB will undertake QE with adequate
dispatch, but at least they seem willing to swallow their pride and start to
do their part to mitigate the global depression that we are already in.
If they move fast enough they may even prevent the eurozone breaking. Big if.
raivo: I can only read English, sorry.
Posted by: John | March 27, 2009 at 03:29 PM