Don’t Worry, ECB Happy…

So, the latest 'bazooka' is finally unveiled and (surprise) it was ever-so-slightly higher than the number the ECB leaked to the market as a trial balloon this week - just to make SURE that the market's initial reaction was positive.

In the ensuing press conference, an interesting exchange happened between Draghi and a journalist.

Draghi was asked the following question (paraphrased slightly because I didn't take notes):

"Can we assume that this is everything left in your toolbox? Can we assume that the next move by the ECB will be to move to a tightening cycle?"

Drag's response was telling. He literally laughed in the guy's face. He said "I could make so many jokes but perhaps this is not the time for jokes".

QE will once again fail and they will resort to the only weapon they have left - more QE.

Which is lucky because, as Soc Gen has already pointed out, the 'bazooka' won't be enough:

"The potential amount of QE needed is €2-3 trillion! Hence for inflation to reach close to a 2.0% threshold medium term, the potential amount of asset purchases needed is €2-3tn, not a mere €1tn."

"The potential amount of QE needed is €2-3 trillion! Hence for inflation to reach close to a 2.0% threshold medium term, the potential amount of asset purchases needed is €2-3tn, not a mere €1tn."

The response to failed QE programs is always the same; "They just didn't print ENOUGH money" and it is always impossible to disprove, of course, but by throwing in both their hat AND the towel, the ECB today brought the end of the era of supreme confidence in Central Bankers that much closer to a close.

Got gold?