Three weeks ago, when previewing the restart of the ECB’s monetary easing in the form of even more negative rates and further QE – which just like the Fed’s rate cut and subsequent ZIRP, NIRP and QE is now inevitable – Goldman laid out three potential “bundles” which Mario Draghi could unveil as one of his last pre-retirement acts, depending on just how severe the ECB perceives Europe’s economic slowdown. There were as follows:
- First, a “small” program which includes a 10bp deposit rate cut and corporate purchases (scaled to EUR 5bn per month for six months).
- Second, Goldman constructs a “medium” package which includes a 20bp rate cut with tiering, somewhat stronger forward guidance, corporate purchases (EUR 5bn per month for nine months) and limited sovereign purchases (EUR 25bn per month for nine months).
- Third, the bank considers a “large” package that contains more aggressive sovereign purchases (scaled to EUR 75bn per month for twelve months) via an increase in the issuer limit, in addition to the other elements in the medium package.
In retrospect, it appears at least one major asset class was missing.
To be sure, it’s hardly a novel idea: back in 2016, Reuters first floated an ECB trial balloon that the central bank “may soon be forced to follow the Bank of Japan’s example and buy equities as part of any expanded stimulus programme,” even as it faces significant hurdles in helping all 19 euro zone members equally without distorting a key market for investors.
Citing analysts, Reuters noted that Draghi, and soon Lagarde, will have to pursue alternative options to loosen policy further to lift growth and inflation across the bloc: “Analysts say these could include large-scale share buying, a policy that the BOJ has already adopted after it started purchasing equity exchange traded funds (ETFs) for its own quantitative easing scheme six years ago.”
Now, none other than the head of the world’s largest asset manager, BlackRock CEO Larry Fink, has chimed in on this, and in his view the Japanification of Europe is almost complete, and that the ECB – as so many have speculated – will have no choice but to buy stocks to stimulate Europe’s slowing economy….
Pay no attention to the magician behind the curtain as he takes ownership of the european corporate infrastructure via financial subterfuge, and a very old and tired scam called fractional reserve banking and its necessary consequence: central banking. No doubt these philanthropists will donate such assets to the “common good” and they will rain down onto the heads of the parched peasants like spring water when the “crisis” is over. Or at least the fraction of the assets forged in Pb. It’s just logic.
This is an IQ test for humanity. Will we stand by and let smooth talking gangsters steal the world out from under us in the name of saving us from the disaster that they created?