Milquetoast Mario: Too Little, Too Late... Again
by AL MARTIN (AL MARTIN RAW)
(1-23-15) On January 22, 2015, ECB (European Central Bank) Chief Mario Draghi announced a new QE (Quantitative Easing) program which means “monetary stimulus” -- purchasing a combination of government sovereign debt and high-grade corporate bonds.
This is usually accompanied by a reduction in the central banks’ benchmark interest rate – which was not done because the ECB benchmark rate is already in the red.
Thus it becomes a case of pushing on a string.
What they intend to do is purchase 60 billion Euro a month until September 2016. They will be buying high-grade core sovereign debt (bonds) which will have very little stimulative effect. They have held off any decision about buying Greek sovs until after the Greek election, since there is a possibility that a government can be put together in Greece that would simply default on the 380 billion Euros that it already has in the ECB. How many peripheral bonds (sovereign debt from Greece, Italy, Spain, Portugal and Ireland) they’re going to buy is still undecided.