Open Europe : Cut through the chatter

[Politics.be]

Markets buoyed as ECB unveils larger than expected QE programme – hostility clear in GermanyAs anticipated, the ECB yesterday announced a Quantitative Easing programme to purchase sovereign and private sector assets. The programme is larger than expected with purchases totalling €60bn per month, from March 2015 to September 2016 – though they could continue if there is no significant pick-up in inflation. Purchases will be made according to the ECB’s capital key (based on GDP and population), but risk will only be partially shared with the ECB taking 20% and the rest lying with National Central Banks. De Telegraaf reports that five members of the ECB Governing Council – the two from Germany, as well as representatives from the Netherlands, Austria and Estonia – opposed QE, though there was no formal vote. There were signs the move surprised markets in terms of size with the euro weakening sharply, stock markets rising across the bloc and government borrowing costs falling.German CSU politician Peter Gauweiler said on Thursday – even before QE was announced – that he is consulting lawyers on a case against the programme at the German Constitutional Court. The Economics editor of Frankfurter Allgemeine Zeitung, Holger Steltzner, writes of the decision, “Europe’s most powerful institution buries the principles of the currency union.” Writing in the Telegraph, Open Europe’s Mats Persson argues the programme could be like energy drinks that “turned out to be all sugar…A short-lived boost was followed by even greater fatigue.”Guillaume Maujean, Finance and Markets Editor at French business daily Les Echos, comments, “Draghi is the only one working on reconciling countries that are still too divergent, with a QE that gives a foretaste of what Eurobonds will be. Caesar knew that he could trigger a civil war by crossing the Rubicon. But history fully rewarded him for taking the risk. The die is cast.” John Müller, Deputy Editor of Spanish daily El Mundo, argues, “It is difficult to accept that what happened yesterday was a monetary policy decision, as Draghi wants to make us believe. In reality, the ECB is acting as a lender, as if it were a European Treasury that doesn’t exist…This is not monetary policy. This is fiscal policy.” In response to the move the Danish Central Bank cut rates for the second time in a week, to help protect its currency peg to the euro.Source: ECB Statement ECB Press release Open Europe Response Frankfurter Allgemeine Zeitung: Steltzner De Telegraaf Corriere della Sera Les Echos El Mundo The Daily Telegraph: PerssonDaily Shakeup RSS Feed

Polls show comfortable SYRIZA lead ahead of Sunday’s Greek election
A new Public Issue poll released this morning puts SYRIZA on 35%, New Democracy on 30% and To Potami on 7%. Greek Deputy Prime Minister Evangelos Venizelos told Italian daily Corriere della Sera, “What SYRIZA is using to seduce voters is lies…I hope the Greeks won’t have to pay too high a price for Sunday’s vote.”

Greek Prime Minister Antonis Samaras said that the ECB’s decision to effectively exclude Greece from QE, unless its current bailout review is completed, highlighted the risk of a SYRIZA government. Open Europe’s Vincenzo Scarpetta is quoted by the Associated Press as saying, “A SYRIZA victory would definitely reverberate around Europe, not least because you have similar parties emerging in other countries.” Vincenzo also appeared on CNN International’s Quest Means Business show discussing the prospect of Greece’s euro exit.

Speaking at Davos, Finnish Prime Minister Alexander Stubb said, “It will be very difficult for us to forgive any loans or restructure debt at this particular moment. We can look at different kinds of extensions; we can look at different kinds of programmes”. Dutch Finance Minister and Eurogroup Chief Jeroen Dijsselbloem warned in an interview with Spiegel Online that countries who require support must accept “conditions” and “just asking for loans” without accepting the “rules and conditions” will not work. Meanwhile, the ECB has warned Greek banks over purchasing too much Greek short term government debt as it could impact their balance sheet risk.

Source: Public Issue Associated Press The Financial Times Kathimerini Reuters Deutschland Spiegel Online
Merkel ready to discuss free-trade agreement with Russia
Speaking at the World Economic Forum in Davos yesterday, German Chancellor Angela Merkel said that Germany is “ready” to open talks about “possibilities for co-operating in a collective trade area ,” under the pre-condition of a comprehensive peace agreement in Ukraine. Her remarks were echoed by Germany’s Economy Minister and Vice-Chancellor Sigmar Gabriel who said, “We need to offer Russia a way out…the next step is a free-trade zone.” Separately, the Wall Street Journal reports that Russia is planning to build a new gas pipeline across Turkey circumventing Ukraine.

Source: Süddeutsche Zeitung Die Welt The Wall Street Journal
Spain’s borrowing costs hit new all-time low
Following the ECB’s Quantitative Easing announcement, the interest rate on Spain’s ten-year bonds fell to 1.3% this morning – a new all-time low, Expansión notes. Separately, Open Europe’s Raoul Ruparel is quoted by Reuters discussing Spain’s current economic situation and its possible impact on this year’s general elections. “In the short term and the run-up to elections, the government is going to do what it can to boost growth, as its main play is going to be ‘all the work we’ve done is paying dividends’,” he says.

Source: Reuters Expansión
Broadcasters attempt to “call Cameron’s bluff” on TV election debates
The Daily Telegraph reports that the major UK broadcasters have negotiated for the BBC and ITV to hold two seven-way general election debates, while Channel 4 and Sky News stage a straight head-to-head match between David Cameron and Ed Miliband. Nick Robinson, the BBC’s political editor, said that the plans appeared “designed to call Cameron’s bluff”.

Source: The Daily Telegraph

Bron: politics.be