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The ECB has offered Spain’s banks bailout loans at 1% for up to 3 years. Spain’s bond yields tumble on the news. Now watch the banks buy Spanish bonds with the cash and make a tidy margin.
Is this Draghi’s form of QE and a way around Germany’s resistance to direct sovereign lending? 😯
http://www.telegraph.co.uk/finance/financialcrisis/8967912/ECB-helps-Spanish-borrowing-costs-halve.html -
@logan wrote:
The ECB has offered Spain’s banks bailout loans at 1% for up to 3 years. Spain’s bond yields tumble on the news. Now watch the banks buy Spanish bonds with the cash and make a tidy margin.
Is this Draghi’s form of QE and a way around Germany’s resistance to direct sovereign lending? 😯
http://www.telegraph.co.uk/finance/financialcrisis/8967912/ECB-helps-Spanish-borrowing-costs-halve.htmlOr is the ECB’s way of making sure they can get a bit of peace and quiet from the markets this Christmas? 😉
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Cheap money on a global scale always leads to bubbles. Why regulators couldn’t see it a decade ago is quite beyond me. What’s interesting in this recent ECB largesse is the scale of rapid uptake by Europe’s banks.
They are in fairly dire straights right now and let nobody be under any illusions, as we pass to a New Year this thing is on the edge. 🙁 -
@logan wrote:
Cheap money on a global scale always leads to bubbles. Why regulators couldn’t see it a decade ago is quite beyond me. What’s interesting in this recent ECB largesse is the scale of rapid uptake by Europe’s banks.
They are in fairly dire straights right now and let nobody be under any illusions, as we pass to a New Year this thing is on the edge. 🙁The problem is that a lot of people thought the bubble was going to burst but the bursting never occured so they sort of changed their stance, media got tired of reharping it or they just started believing in the counter argument “the economy was changing=)”.
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A few of us actually anticipated the bursting bubble. I sold almost all of my property portfolio whilst everyone was piling into Spanish property convinced by the hype. It was not difficult to see the signs were everywhere.
JD Rockefeller saw the Wall Street crash coming when his shoe shine boy started asking him for share tips. It was much the same in Spain. Working people who had no experience of property development or speculation were buying into leveraged off plan developments believing they would get rich. Money (credit) was far to easy to obtain by anyone who asked for it. Property was increasing in value at unsustainable levels.
No one spoke against the madness, especially governments and bankers because they were actually getting rich.
When property is on the up as an investment and the market is buoyant, it’s the investor who gets in before anyone else and equally gets out before anyone else who does well.
Knowing when those times exist is the holy grail. -
We started selling in 2002. A little early but at least they sold quickly. Anyone on the ground could see it couldn’t last. By 2004 there were lots more se vende signs and none of the people who bought off-plan could sell even though there were still punters buying their own off-plan. Not just the buyers inexperienced, nearly every ex-pat was into selling property. They came off the plane and 2 weeks later were showing buyers around 😆
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In times of crisis, “cheap money” is a Godsend to individuals, businesses and governments for putting their houses in order.
The problem arises when those empowered to know better (bankers, government officials, stock brokers, realtors, etc.) are so addicted to their own profit models that being profitable becomes the priority over fixing what’s wrong, and fiscal responsibility is abandoned.
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Cheap money offers an opportunity for individuals to act irresponsibly and they usually do, spurred on by advertising and property promotion TV shows and manufactured phoney dreams.
Cheap easy money creates demand that’s it’s point.
Western capitalist countries have relied on consumer demand to fuel their economies. Business such as commercial bankers, estate agents and developers simply respond to that demand.
It is not their responsibility to regulate consumers. Their raison d’être rightly is to maximise profit for their investors and shareholders.
The responsibility for too much cheap money sloshing around the world in the last decade lies with the politicians and central bankers who possess the leavers of power.
I can name some of them. Mervyn King, John Claude Trichet ,Alan Greenspan et al.
Interest rates should have been increased early to choke off demand in the USA and Europe, Credit should have been made expensive and difficult to obtain.
They failed to act, sat on their hands until it was too late and the damage was done.
Their political masters also carry responsibility for failing to regulate and pressurise their central banks to act in time.
Blaming the consumer and business for the financial crisis is like beating up a golf ball for not going on the green.
The responsibly lies elsewhere.
What is a scandal is how none of these people who carry the responsibility are never brought to account or sanctioned.
They usually are given honours, shuffled off to some none job either in the House of Lords or some equally irrelevant body. -
@logan wrote:
Cheap money offers an opportunity for individuals to act irresponsibly and they usually do, spurred on by advertising and property promotion TV shows and manufactured phoney dreams.
Cheap easy money creates demand that’s it’s point.
Western capitalist countries have relied on consumer demand to fuel their economies. Business such as commercial bankers, estate agents and developers simply respond to that demand.
It is not their responsibility to regulate consumers. Their raison d’être rightly is to maximise profit for their investors and shareholders.
The responsibility for too much cheap money sloshing around the world in the last decade lies with the politicians and central bankers who possess the leavers of power.
I can name some of them. Mervyn King, John Claude Trichet ,Alan Greenspan et al.
Interest rates should have been increased early to choke off demand in the USA and Europe, Credit should have been made expensive and difficult to obtain.
They failed to act, sat on their hands until it was too late and the damage was done.
Their political masters also carry responsibility for failing to regulate and pressurise their central banks to act in time.
Blaming the consumer and business for the financial crisis is like beating up a golf ball for not going on the green.
The responsibly lies elsewhere.
What is a scandal is how none of these people who carry the responsibility are never brought to account or sanctioned.
They usually are given honours, shuffled off to some none job either in the House of Lords or some equally irrelevant body.Thats the thing. It’s impossible for the “government” to do what you are asking for. What needs to be done is to totally deregulate the banking systems so people actually have to pay the real “cost” of money. Competing currencies needs to be allowed so the state can’t “bribe” their people with gifts and other things by printing more money. Anyone that knows how the fractional banking system works and add to the fact that the states are taking the risk by backing up the banks is just asking for problems.
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Governments can do anything they choose. In reality they never do what is right or needed because that would likely lose them elections. Unpopular measures are usually what countries need but nobody wants.
Leaders should lead no matter what the consequences to them personally or their parties electoral prospects. -
What needs to be done is to totally deregulate the banking systems so people actualely have to pay the real “cost” of money. Competing currencies needs to be allowed so the state can’t “bribe” their people with gifts and other things by printing more money. Anyone that knows how the fractional banking system works and add to the fact that the states are taking the risk by backing up the banks is just asking for problems.
There is a difference between fiscal the regulation/oversight of banks and allowing ‘the market’ to prevail in setting a currency’s value. Without regulation, all of our money in banks would be stolen by bankers. All of it would be gambled away. So eliminating those types of regulations would be a horrible idea.
It used to be that bankers would have to negotiate with us in order for them to take our money. Now they lobby governments to fleece us by allow high fees, excessive interest, and for the taxes we pay to cover the bank’s costly mistakes.
And it isn’t always political motivations that are involved with the interference with setting a currency’s value. Sometimes it makes fiscal sense to do so. A country is obligated to its people, and not to some ridiculous ideal of a pure economic system.
I do agree with you that currencies should be more ‘competitive’. However that is only one small component in this gigantic fiscal mess.
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@GarySFBCN wrote:
What needs to be done is to totally deregulate the banking systems so people actualely have to pay the real “cost” of money. Competing currencies needs to be allowed so the state can’t “bribe” their people with gifts and other things by printing more money. Anyone that knows how the fractional banking system works and add to the fact that the states are taking the risk by backing up the banks is just asking for problems.
There is a difference between fiscal the regulation/oversight of banks and allowing ‘the market’ to prevail in setting a currency’s value. Without regulation, all of our money in banks would be stolen by bankers. All of it would be gambled away. So eliminating those types of regulations would be a horrible idea.
It used to be that bankers would have to negotiate with us in order for them to take our money. Now they lobby governments to fleece us by allow high fees, excessive interest, and for the taxes we pay to cover the bank’s costly mistakes.
And it isn’t always political motivations that are involved with the interference with setting a currency’s value. Sometimes it makes fiscal sense to do so. A country is obligated to its people, and not to some ridiculous ideal of a pure economic system.
I do agree with you that currencies should be more ‘competitive’. However that is only one small component in this gigantic fiscal mess.
As an example.
A country has two major currencies. One backed by for example copper and one is a fiat currency. If the government then decides to missbehave people will just stop using the fiat one and use the currency actually backed by something. It doesn’t even need regulation. Fractional reserve banking is a pyramid scheme and should be considered as fraud. It’s not to little regulation that have caused this it’s a fraudulent system created by lobbyists.
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