Translation- they keep funding on an as needed basis, at least for now.

*DJ ECB Trichet: The ECB Is Meeting Its Resposibilities
*DJ ECB Trichet: Important That Deficit Targets Are Met
*DJ ECB Trichet: Spain Should Deepen Labor Mkt Reform
*DJ ECB Trichet: Bank Stress Tests Are Very Useful
*DJ ECB Trichet: Stress Tests Important To Do On Regular Basis
*DJ ECB Trichet: Investors Don’t Yet Appreciate Postive Actions Taken
*DJ ECB Trichet: We Permamently Watch Commodities Prices
*DJ ECB Trichet: Spain One Of Countries That Needs Deficit Cuts

17 Responses

  1. “hey keep funding on an as needed basis, at least for now.”

    As long as the periphery continues to impose austerity. We see where the neoliberal solution is leading from recent events in the UK.

  2. Since there are only two long-term solutions to the EU problem, I’m curious as to which one you think they eventually will adopt. The two are:

    1. The individual nations re-adopt monetary sovereignty by dropping the euro
    2. The EU asserts its monetary sovereignty by giving (not lending) euros to the monetarily non-sovereign nations.

    What’s your guess?

    Short term, of course, they will continue to lend to nations that are over-borrowed, then demand austerity, but that makes them no more clueless than the U.S. politicians who want to decrease taxes while decreasing the deficit.

    Rodger Malcolm Mitchell

    Rodger Malcolm Mitchell

    1. This is a political battle between the neoliberal unionist whose goal is to see a politically unified Europee that they control put on a par with the economy of the US (and before long China, India, and Brazil), and the nationalists who believe that national sovereignty is in the best interests of the nation. The unionists had been winning before the crisis, even though the popular opposition prevented them from erecting a political institution with fiscal authority comparable to the ECB’s control over monetary policy. As a result, their program is seriously faltering.

      Under present circumstances, things are going against the neoliberal unionists, although they still have the upper hand in setting economic policy and the present governments are going along with them. I expect to see that change as austerity bites and there is social unrest resulting in regime change in several countries.

      This portends to be quite a kerfuffle and it could last a while. I doubt it is possible to do more than guess at the outcome at this juncture. There are quite a few ways it could develop depending on unfolding circumstances.

  3. Fellow MMT proponents, Banker and I have been working to advance the concepts of MMT on the forum site America’s Debate. We have made much progress but are at times overwhelmed by the many challenges and questions as it is two against many. I have provided a link to the thread below for any who want to help us in our attempt to further our cause.

  4. PJ,

    I read through as much of that as I could. I’m amazed at your patience and equanimity. Great work! When an idea’s representatives are so rooted in making patient, positive and good-faith arguments for their points, it can’t help but be effective.

    1. Thanks Karl,

      Appreciate the kudos. As PJ (posting as PJ4xtrader)indicates, I think we’ve made some headway but the time demands that the debate require are large. The denizens at America’s Debate are intelligent, well-read and, for the most, part polite. Should anyone have the desire to invest some time in some well-mannered debate I would suggest jumping right in. Sometimes a new perspective or way of saying things is all that is needed for a breakthrough and these are certainly the kind of people that would be tremendous advocates for financial reform if they could just be convinced that the MMT perspective is valid.


      The Banker

      1. Signed up, would comment, but the admin hasn’t completely approved the account yet. Looks like a good place to enslave minds to our evil conspiracy to rule the world, bwahhaahha,^H^H^H^H^H^H^H^H^H errr.. win converts.

  5. Hello. Did you see the last absurdity of the European Central Bank? It wants to increase its capital, maybe through retained earnings, in case it lost ‘money’ on its lending or Securities Market Program (Sovereign peripherical Bonds buying)!
    IS that not a nice way to confess that the ECB does nto understand that it has no liability in its own currecny?
    Or is it simply another political ploy to impose another dose of austerity on european governments???
    One may wonder how all of this will end…

  6. If the ECB is going to be raising capital through its member banks then they’re effectively doing ‘reverse QE’. Under this program of ‘reverse QE’ banks would have to sell government bonds and transfer the proceeds to the ECB to meet that bank’s increased capital requirements. Effectively this is indifferent from a situation where the ECB would be selling government bonds and held on to the proceeds.

    It looks like they’re insisting on creating another liquidity crisis in the European financial system. They’re working to raise the reserve requirements for private banks, insurance companies and pension funds alike, just as they’re introducing reverse QE. This doesn’t add up but they’re too incompetent to know it.

  7. ECB finansing itself through bond sale and using preceeds to support peripheral bond prices ir ponzi by definition.

    Clearly less costly and less unacceptable in comparision to currently negotiated bailout mechanisms. Should work for a while.

    1. Further, if ecb ponzi succeeds in stabilisation of eurozene risk perceptions, it will allow bigger self-financed deficit spending (exception after exception, without change in austerity retorics) by peripheral governments.

      1. ponzi is when the borrower is required to borrow more to make payments.

        the ecb makes payments simply by data entry and has no operational requirement to fund expenditures.

  8. Why Are Bankers So Rich?
    — By Kevin Drum| Tue Dec. 14, 2010 9:46 PM PST

    Tyler Cowen has a big piece about income inequality in The American Interest that’s well worth reading. However, it’s not really about the growth of inequality. It’s about Wall Street. In particular, it’s about this question: why do financial professionals make so damn much money?

    The answer, of course, is that they work in an industry that’s become ungodly profitable. But how?
    This has always been one of the central mysteries of modern finance: Why is it so damn profitable? We’re talking about an industry that’s global, largely commoditized, and highly competitive. Profits should have been under extreme pressure for the past few decades. And yet, somehow, just the opposite was true. Against all theory, banks were able to consistently charge excessive prices; consistently take the better side of financial bets; and consistently persuade every other actor in the business that mispriced risk was, in fact, correctly priced. The result has been wild profitability and huge bonuses.

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