Wednesday, March 26, 2014

I Think I'm Turning Japanese

Well, not me, per se. More like the ECB is turning Japanese.
European Central Bank officials sent strong signals Tuesday that they are willing to consider dramatic steps to guard against dangerously low inflation, suggesting the bank is prepared to shed some of its traditionally cautious approach.

The possible tools, cited by some top policy makers from different parts of the euro zone, include effective negative interest rates—meaning rates so low that commercial banks would essentially pay the ECB to park their extra cash overnight. They also include purchases of government or private-sector debt to hold down long-term rates and spur lending.
It looks like Mario Draghi and his crew at the ECB have decided to cover The Vapors hit song in their own, unique way.

I'm turning Japanese
I think I'm turning Japanese
I really think so
Turning Japanese
I think I'm turning Japanese I really think so

The idea is to flood the place with Yen Euros and then watch everyone rush around spending them. Additionally, this will devalue the Yen Euro and make Japanese European exports cheaper, increasing demand.

Japanese exports haven't jumped the way they expected following their efforts to devalue the Yen using these exact same tools. In fact, the Japanese economy is pretty stagnant and they're executing this strategy in spades.

Funny how the only Japanese export that's booming is the total failure known as Abenomics. Oh well. At least we can enjoy listening to this fun music while the central banks print and print and print and the central governments spend and spend and spend.

No comments: