{"id":11839,"date":"2015-09-05T06:49:48","date_gmt":"2015-09-05T11:49:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11839"},"modified":"2015-09-05T06:49:48","modified_gmt":"2015-09-05T11:49:48","slug":"the-imf-just-confirmed-the-nightmare-scenario-for-central-banks-is-now-in-play","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11839","title":{"rendered":"The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play"},"content":{"rendered":"

The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play<\/a><\/h3>\n

The most important piece of news announced today was also, as usually happens, the most underreported: it had nothing to do with US jobs, with the Fed’s hiking intentions, with China, or even the ongoing “1998-style” carnage in emerging markets. Instead, it was the admission by ECB governing council member Ewald Nowotny that what we said about the ECB hitting a supply brick wall, was right. Specifically, earlier today Bloomberg quoted the Austrian central banker that the ECB asset-backed securities purchasing program\u00a0“hasn\u2019t been as successful as we\u2019d hoped.<\/strong>”<\/p>\n

Why? “It\u2019s simply because they are running out. There are simply too few of these structured products out there.”<\/p>\n

So six months later, the ECB begrudgingly admitted what we said in March 2015, in “A Complete Preview Of Q\u20ac \u2014 And Why It Will Fail<\/a>“, was correct. Namely this:<\/p>\n

\n
… the ECB is monetizing over half of gross issuance (and more than twice net issuance) and a cool 12% of eurozone GDP. The latter figure there could easily rise if GDP contracts and\u00a0Q\u20ac is expanded, a scenario which should certainly not be ruled out given Europe\u2019s fragile economic situation and expectations for the ECB to remain accommodative for the foreseeable future<\/strong>. In fact, the market is already talking about the likelihood that the program will be expanded\/extended.<\/div>\n

… while we hate to beat a dead horse, the sheer lunacy of a bond buying program that is only constrained by the fact that\u00a0there simply aren\u2019t enough bonds to buy, cannot possibly be overstated.<\/strong><\/p>\n

Among the program\u2019s many inherent absurdities are the glaring disparity between the size of the program and the amount of net euro fixed income issuance and the more nuanced fact that the effects of previous ECB easing efforts virtually ensure that Q\u20ac cannot succeed.<\/strong><\/p><\/blockquote>\n

(Actually, we said all of the above first all the\u00a0way back in 2012<\/a>, but that’s irrelevant.)<\/em><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play The most important piece of news announced today was also, as usually happens, the most underreported: it had nothing to do with US jobs, with the Fed’s hiking intentions, with China, or even the ongoing “1998-style” carnage in emerging markets. Instead, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1265,8692,56,57,3756,1719,124,130,285,291,305,6038,8693,8694,434,6065,452,8695,8696,6910,8697,3926,8470,2773,4318],"class_list":["post-11839","post","type-post","status-publish","format-standard","hentry","category-economics","tag-abenomics","tag-asset-backed-securities","tag-bank-of-england","tag-bank-of-japan","tag-boe","tag-bond","tag-central-banks","tag-china","tag-eurozone","tag-fail","tag-federal-reserve","tag-fixed","tag-institutional","tag-insurance-companies","tag-international-monetary-fund","tag-investors","tag-japan","tag-kyle-bass","tag-market-conditions","tag-meltdown","tag-monetary-base","tag-monetization","tag-nomura","tag-volatility","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11839"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11839\/revisions"}],"predecessor-version":[{"id":11840,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11839\/revisions\/11840"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}