ECB Cuts Long-Term GDP Growth, Inflation Forecasts

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Zero Hedge: With Mario Draghi having already disappointed markets by failing to deliver a “big bang” announcement, and instead extending the lower for longer period until the first half of 2020 as was already priced in by the market, and unveiling less generous TLTRO III terms that left much to be desired, during today’s press conference Draghi also unveiled the ECB’s latest economic forecasts, which also confirmed that Europe is nowhere near ending its long-running economic malaise.

To wit, while the ECB revised up forecasts for 2019 euro-area growth and inflation by 0.1 percentage points in its new projections, it trimmed its 2020 and 2021 GDP forecasts from the March forecast, by 0.2% and 0.1%, respectively:

  • Sees 2019 at 1.2% vs 1.1% in March
  • Sees 2020 at 1.4% vs 1.6%
  • Sees 2021 at 1.4% vs 1.5% more …

Opinion: Keep in mind that 3% GDP growth is needed to employ new people coming into the work force. With that in mind, it is little wonder that the ECB (European Central Bank)  has invented TLTRO I, II, and now III to stimulate EU economy that is on life support.

TLTRO is new series of four targeted longer-term refinancing operations (TLTRO II). The new operations will offer attractive long-term funding conditions to banks to further ease private sector credit conditions and to stimulate credit creation. TLTRO II is intended to reinforce the ECB’s accommodative monetary policy stance and to strengthen the transmission of monetary policy by further incentivising bank lending to the real economy. 

Translation: TLTRO (long term financing operations) is a new acronym for printing money. By creating new money for lending at very low interest rates the European Central Bank is essentially bailing out banks (again), and with the big kahuna, Deutsche Bank, teetering, it is none too soon. If Deutsche Bank goes, Europe goes, so says Charles Nenner a respected market advisor.

The point here is that the global economy, particularly the US and EU, has never gotten over the 2008-9 financial crisis. If, as we have said many times before, the US and EU economies had gone into depression, both would have emerged years ago stronger and without untold trillions in new debt.

Image result for kicking the can down the road

But that is not what happened. Instead Central Bankers cranked up their respective  printing presses and kicked the proverbial can down the road, which will only make the final crash that much worse.

In the meantime, we can go on ‘eating and drinking and giving in marriage’ …. Matthew 24:38.