Posted on 09/05/2012 2:01:09 PM PDT by blam
Goldman Has The Most Devastating Description Of The ECB's New Bond Buying Scheme
Joe Weisenthal
Sep. 5, 2012, 1:56 PM
inShare.3
That's the term Goldman is going with to describe the new ECB bond buying scheme that will likely be announced tomorrow.
Details of the scheme were broken earlier today, and they basically come down to the idea that the ECB will buy sovereign debt in unlimited volumes, but there won't be an explicit cap on yields, and the ECB will "sterilize" its purchases, meaning that for every bond it buys, it will remove an equivalent amount of liquidity from the system somewhere else.
The term SMP 2.0 is devastating, as SMP (Securities Market Programme) is the scheme that the ECB tried last year, when it half-heartedly bought peripheral debt in a very mediocre attempt to suppress yields. The effect was minimal, and it hardly stemmed the crisis.
From Goldman...
Spelling out the details of SMP 2.0
The main focus of this Thursday’s press conference will be a clarification of the modalities under which the ECB would be willing to intervene again in short-dated sovereign debt markets. In August the Governing Council declared that it “may undertake outright open market operations of a size adequate to reach its objective.”
As we have explained in more detail... there are different degrees of market interventions that are in principle consistent with this announcement. Outright caps of yields or spreads would be obviously at one of the spectrum, while occasional interventions to dent spikes would be at the other end. Several statements from Governing Council members over the last couple of weeks, in particular a very critical interview from Bundesbank head Weidmann, have shown that there is no consensus within the Governing Council what the appropriate degree of intervention is.
(snip)
(Excerpt) Read more at businessinsider.com ...
never ending bailouts
Yeah, that’ll work. Glad we fixed THAT problem. Now, back to global warming.
Give with one hand, take with the other?...........
Brought to you by a mad man made world, where what goes down must come up. The very fabric of reality is being shredded weekly by banksters whoring around with DC gangsters. Since this didn’t hardly causes a ripple in the collective conscience of USAians and their _news_ or political apparatchik, it is game on in the EU.
Decent into slavery for most; for some: come out of her My people!!!
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