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ECB To Start Massive QE Program

Those living on the Interest from savings or complementing the purchasing an income for life with a lump sum may well be consigned to a life fuelled by dog food for quite sometime to come.
 
Well, QE worked great in the US, for boosting asset prices, holding down interest rates and generally enriching Wall St. For the average guy in the street, not so much: sure unemployment has fallen here, but so have average hourly wages.

I predict asset bubbles combined with a generally crappy economy for the working stiff.
 
Good for exporters as the Euros is crashing, bad for importers. Time will tell, been waiting for 8 odd years to see an improvement, euro crashing is not it for me personally.
 
Europe being Europe QE is not exactly what it seems:-

"Most important of all perhaps, if the purchase of government bonds is not by the ECB itself but by the national central banks that collectively stand behind the ECB, that would be a great disappointment to markets - even though there have been plenty of leaks to the effect that such "nationalisation" of bond purchases is likely to be what happens."

...and the unravelling of the eurozone principle about monitory policy?

Cheers,

DV
 
My A-Level economics lessons were a long time ago, but I'm pretty sure I was taught that printing money was a Bad Thing. Is QE ok because the money is created electronically, or because of who gets the new money?
 
I'm open to persuasion, but I'm not convinced it will be the panacea people seem to think it will be.

Interest Rates are already low, even negative in some cases, so how will this stimulate economic activity ?

Will it boost confidence that our jobs are not long term at risk ?

Will banks increase lending that is currently required but not being fulfilled ?

I can only see it having an effect if it triggers an increase in government spending on infrastructure projects and so on.

I am pessimistic, I have to say.
 
Better to give it to Europeans themselves perhaps with some limits on what they can spend it on, such as European made goods, new car, building and infrastructure work or a new car to stimulate the economy.

It'd be really annoying though to see that working after the UK just gave billions of QE cash to the banks who just squirrelled it away for a rainy day.

Stephen
 
I think it is really nice of them to get involved given the match with Australia tomorrow and the revelation about Eoin Morgan and blackmail to deal with.
 
bor said:
I'm open to persuasion, but I'm not convinced it will be the panacea people seem to think it will be.

Interest Rates are already low, even negative in some cases, so how will this stimulate economic activity ?

Will it boost confidence that our jobs are not long term at risk ?

Will banks increase lending that is currently required but not being fulfilled ?

I can only see it having an effect if it triggers an increase in government spending on infrastructure projects and so on.

I am pessimistic, I have to say.
Click to expand...

I have similar reservations. It was only a short while ago there was talk of the Eurozone entering a deflationary period. Hopefully, our resident economy guru matthewr will be along soon with his take on it.
 
Vinniemac said:
My A-Level economics lessons were a long time ago, but I'm pretty sure I was taught that printing money was a Bad Thing. Is QE ok because the money is created electronically, or because of who gets the new money?
Click to expand...

The "Bad Thing", specifically the effects on inflation, is different when interest rates are at zero like they are now. i.e. normally "printing money" would drive inflation up but this relationship breaks down when interest rates are at zero (aka the zero lower bound).
 
Cut to the chase... Exchange rate effect please.... Can someone tell me will it be cheaper to buy things from Amazon in the EU? I don't care what happens to the eurozone I just want cheaper stuff than I can buy in the uk.
 
bor said:
I'm open to persuasion, but I'm not convinced it will be the panacea people seem to think it will be.

Interest Rates are already low, even negative in some cases, so how will this stimulate economic activity ?

Will it boost confidence that our jobs are not long term at risk ?

Will banks increase lending that is currently required but not being fulfilled ?

I can only see it having an effect if it triggers an increase in government spending on infrastructure projects and so on.

I am pessimistic, I have to say.
Click to expand...

I don't think anyone thinks it will be a panacea. In fact even people who support the policy think it's too late to have an effect in Europe which is already in a deflationary trap and basically stuffed like Japan.

At this point its very hard to see what they can do. Given they cannot even do QE properly or at the correct time, other avenues of unconventional monetary policy is a non-starter.
 
CliveGrace said:
Cut to the chase... Exchange rate effect please.... Can someone tell me will it be cheaper to buy things from Amazon in the EU? I don't care what happens to the eurozone I just want cheaper stuff than I can buy in the uk.
Click to expand...

GBP/EUR has already jumped from about 1,27 a couple of weeks ago to 1,32 today, so there could be some short term arbitrage before prices reallign.

I'm guessing that's about as high as it will go, with this QE now priced in. I wouldn't be surprised to see the rate drop back aufter the €phoria has subsided.

(€phoria ? d'ya geddit ? It's a leeetle joke, much like our currency )
 
matthewr said:
At this point its very hard to see what they can do. Given they cannot even do QE properly or at the correct time, other avenues of unconventional monetary policy is a non-starter.
Click to expand...

I think it's a choice between being seen to be doing something that will have little impact and doing nothing - which may have the same magnitude of impact by being seen as a message in itself.

Aren't the other possible choices politically untenable?
 
Could someone please explain why the electronically created money is not spent on infrastructure, say putting fibre to every home in Europe, building new homes, not Spain natch, they have enough, insulation for homes etc, stuff that would generate a return on investment and employ people other than bankers?
 
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