Huky Guru on Guru’s Blog posted a chart that answers the question: How Long Will it Take For the ECB to Own All Sovereign Debt of Eurozone Countries?
At the current rate of purchase of sovereign bonds the ECB will have have purchased all sovereign debt issued by Spain in 9 years and Germany in 8.8 years.
Bond Market Distortion
Distortion in the corporate bond market has picked up since the ECB has started buying corporate bonds. The above chart shows a comparison between the yields of bonds eligible to be purchased by the ECB and bonds with the same rating in the same sector that are not eligible for the ECB.
Corporate bond yields have collapsed across the board since the ECB’s announcement, but even more so for eligible bonds.
Also consider …
- When Will the Bank of Japan Own 100% of Japanese ETFs?
- Banks Ponder Vault Cash in Response to Negative Rates: Lending Reality in a Nutshell
- Is the EU Volcano About to Erupt?
- Spirit of Abenomics: Bold New Plan in September?
Mike “Mish” Shedlock
According to Brussels the eurozone is a great success and the reason there is a small growth problem is that more printing, more bureaucratic intervention and more central government is required.
The French “code de travail” is 4000 pages long. That´s the kind of regulations all of the eurozone requires.
Lars
Oslo
Norwegistan
When the Central Banks own all the bonds and all the stocks: Who will be the Real Sovereign and the More Powerful, the Central Bank or the Central Government? Will they fight for control? Will sovereigns have an inauguration or coronation ceremony at which they swear fealty or pledge allegiance to the Central Bank? Will the head Central Banker don regal robes and be equivalent of the Pope to the atheist socialist flock?
Since Central Banks print money and in a cashless society will have totalitarian control of the population via money, Central Banks will likely be the most powerful entities on the planet. My guess is that controlling the money supply will be worth more than the CIA/NSA/Intel surveillance state. But combining the two will be beyond Orwellian.
EU will have a second life, and be rebranded as the EUSSR or the People’s Republic of Europe. Walls being built to keep immigrants out will be re-purposed to be like the Berlin Wall and keep people from escaping their new Utopia.
EXACTLY!!!
That’s reassuring… if that means the Total Collapse is put off 8+ years 🙂
I was thinking we’d be lucky to make the end of 2016
They’ll just continue the program by accelerating issue of fresh debt.
What stops the madness? At this point more and more people are becoming aware of the fact that all markets are pretty much a fraud. All economic numbers are a fraud as well. So what’s to stop them from just keeping this up?
I think the entire plan at this point is for something like Japan. Slow grind down, just make sure the grind is slow enough not to provoke a backlash from the general public.
S ooner or later the frog notices the water beginning to boil.
Not to be argumentative, but the whole point of the frog analogy is that the heat is raised so gradually the frog never notices and dies.
The frog analogy is wrong – in practice.
The frog will not say in the water until it’s dead. It will jump out
No, eventually the frog boils to death.
what happens if the stove breaks?
The indoctrination arts have seemingly reached a level of sophistication, that renders outsiders the only real threat to the rulers.
An ever weaker Europe, incapable of doing a single thing more productive than sitting around babbling about who “owns the rights” to all the fresh print, according to their sacred scriptures named “rule of law” and “property rights”, will uneventfully be sacked by less idiotic practitioners of Islam. That boat has, in practice, already sailed. America, first South, then North, will follow with a bit of delay.
While the Japanese, true to tradition, are offing themselves without needing much in the way of outside assistance.
And, honestly, considering the trajectories they/we are all on, it’s all for the better.
with the coming breakup of the EU on ‘refugee’ terror, that debt will be defaulted on no matter who owns it……….its 3TRIL$……….go ahead and print that much to cover it and see what happens.
Slightly different but related topic… Do you think the Fed can really raise interest rates beyond a token rate hike or two? I mean the 1 yr Trsry now yields 0.60%, 2yr gets 0.76% and 3yr gets 0.87% Even the 5yr is barely above 1%. Doesn’t raising short-term rates (together with chances of further hikes) lead to a cascading selloff that can bring down the sovereign bond market?
I don’t know what “bring down” means. But the US has a set of banks, the primary dealers, who are required to purchase new issues of bonds, or at least make the market.
But, as the old adage goes, if you are going to panic, panic early.
For certain considerations, they have agreed to be primary dealers. Nothing mandates that they do. If, at some point, it becomes unprofitable to them, they will bail out of the arrangement.
Not if the yield curve inverts … and invert it will, if FOMC tries to raise rates*.
*I’m all for the raising rates NOW (they should have commenced in 2010).
“How Long Will It Take for the ECB to Own All Sovereign Debt of Spain, Germany, France?”
How long will it take for Europe to look like Venezuela?
It’s all out of the hands of the prols at this point. Find your Galts Gulch and prepare to ride out a long storm.
Smart frogs jump out of the pot before the water gets too hot.
As Grant said in an earlier article here, when either candidate “Wins” we are in trouble,,,,or at least the status quo is.
Perhaps of interest,,,
http://www.alt-market.com/articles/2993-globalism-is-a-barbaric-relic-voluntary-tribalism-is-the-future
“How Long Will It Take for the ECB to Own All Sovereign Debt of Spain, Germany, France?”
If they keep down this path … we’re talking serious NIRP … deflation.
Will pensions and other institutional funds still make their +7.5% return target??
How long until the bank owns all of Europe? Chalets, businesses (stocks), bonds, the whole shebang. Allowing bankers to confiscate goods with the printing press leads to bankers owning virtually everything. Bankers always seem to have another excuse to regressively confiscate additional goods from helpless people.
If the ECB had bought the majority of Greece’s debt back in 2011, when confidence collapsed and it couldn’t roll over, there would be no Euro crisis. Instead, we have the perverse situation of the ECB taking the safest country bonds out of the market while leaving the riskiest debt to continue to cause trouble.
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