As Mario Draghi exits stage left what are we left with.
It seems all the cards are on the table now. Interest rates are at the lower bound, Draghi says they cut rates to encourage the TLTRO take up, ABS is now out in the open. Is that the tool box empty now?
I spoke earlier in the comments that Europe was circling the drain. The UK and US managed to paddle away from the whirlpool but Europe is still struggling. For all of the grand plans only rate changes and LTRO’s have been the direct measures used to pull Europe out of the crisis. OMT is still an unused fairy tale, and banking union is still many stations down the line. Draghi is pushing Eurozone members to get their shit together but I don’t like his odds.
ABS. ‘No problem’ he explains, but I fear we’ll be hearing from the Germans soon enough and possibly taking another trip to Karlsruhe and the men in red hats at the German constitutional court. At every turn the Germans will be going over the plans with a fine toothed comb. Already a German CDU finance spokesman has said he takes a “critical view” of the rate cuts.
And so we are told that we’ll get the full details in October, that’s cool but at no point through the presser did we get an actual indication of when the ABS may actually start.
Will it be weeks or months? Again, I know where I’d put my money on and time is a precious quality Europe doesn’t have.
The ECB are in a pickle and more importantly so is Europe. In my mind this is the ECB’s last throw of the dice but there’s a good chance they are too late to save the ship from going down. Eurozone members will be quick to point the finger at the ECB but they should have been looking at themselves a long long time ago. Those looking for a weaker Euro may get their wish but they might not like what comes with it.
