The World can never underestimate the Bundesbank (BUBA) in its ability to erect walls to protect what it believes are German interests. So whether Mr. Draghi's stimulus being euro fifty billion less or more is not the real issue. Rather it seems to be that the Germans (read BUBA) have a perception that as oil recede, there is a substitution effect in place with real incomes of consumers moving up and this acting as a stimulus to demand. So it goes without saying that while there is quantitative easing, it will be what BUBA thinks just enough.
A half hearted stimulus package should result in a QE effort which is sub optimal. Given that ECB
(like most Conservative, blue suited staid central bankers!) is slow and typically bureaucratic, convincing for further quantum installments would be quite tough. A little QE is a dangerous thing and yet the euro appreciates. Japan has been hurt for years (quite longer than even a decade ) on the back of strengthening currency. Europe has seen it happening to its unified currency almost since inception.
In the current scenario, a rise in euro will see fall in exports.
This would affect EU growth rates negatively. Real economics falling, yet currency appreciating!
Views expressed without any risk or responsibility.
A half hearted stimulus package should result in a QE effort which is sub optimal. Given that ECB
(like most Conservative, blue suited staid central bankers!) is slow and typically bureaucratic, convincing for further quantum installments would be quite tough. A little QE is a dangerous thing and yet the euro appreciates. Japan has been hurt for years (quite longer than even a decade ) on the back of strengthening currency. Europe has seen it happening to its unified currency almost since inception.
In the current scenario, a rise in euro will see fall in exports.
This would affect EU growth rates negatively. Real economics falling, yet currency appreciating!
Views expressed without any risk or responsibility.
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