Jim Sinclair’s Commentary
QE to infinity as there simply is no other mechanism on earth to produce that kind of liquidity instantly.
The European Central Bank’s second injection of long-term liquidity into markets could reach as much as 1 trillion euros ($1.33 trillion), analysts predict.
How Big Will the ECB’s Next Liquidity Injection Be?
Published: Thursday, 9 Feb 2012 | 3:40 AM ET
By: Catherine Boyle
The European Central Bank’s second injection of long-term liquidity into markets could reach as much as 1 trillion euros ($1.33 trillion), analysts predict.
Initial estimates for the February 29 operation of three-year, long-term refinancing operations (LTROs) suggested that there would be only about a 100 billion euros take-up by Europe’s banks, but those estimates have shot up in recent weeks after the success of December’s operation became clear.
December’s action by the ECB has spurred a stock market rally after increasing the supply of cheap money, and ECB Director-General Francesco Papadia even suggested that the bank could say “mission accomplished” after the operation.
Yet the effects on the real economy are still to be seen. Banks have shored up their balance sheets, but lending figures to consumers and businesses remain low.
“The hope is that it will trickle down,” said Christel Aranda-Hassel, director of European economics for Credit Suisse, who believes there will be a take-up of around 500 billion euros at the second auction.