Monday, April 25, 2016

Soon There Will Be A Whole
Hive Of Bees After Draghi?
David Stockman* highlights the Germans are saying Draghi is destroying savers, insurance companies, pension funds & banks .. this is one bee now after Draghi, soon there will be whole hive of them .. "When your only tool is a hammer, everything does look like a nail. So Draghi and the NIRPs will undoubtedly keep on printing until they blow the euro-based financial markets sky high .. It is clear that pension funds and others, insurance companies, are seriously affected by the low interest rates – I would caution them not to blame on low rates everything that has gone wrong in the sector – but they are seriously affected……Low interest rates are a symptom of low growth and low inflation. If we want to return to higher interest rates we need to return to higher growth and higher inflation. .. Draghi can’t push NIRP much further without breaking what remains of Europe’s sclerotic socialist banking system .. So this foolishly naïve believer in the elixir of debt is actually pushing on a credit string while inflating the mother of all bond bubbles. There is not a chance that the ECB can extract itself from this dangerous corner, nor continue down the current path much longer. Indeed, when the casino front runners finally conclude that the Draghi jig is up, the European bond market will plunge into a bidless pit as they race to cash in their capital gains and liquidate their repo borrowings .. Then there will be a whole hive of angry bees in Draghi’s bonnet, German speaking ones in the lead."
LINK HERE to the essay

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