Who is at the poker table “All In”, which sets everything on a map. Better put it on two so many keeps a player in by far the most popular variant of the gambling, Texas Hold’em Poker, in the hands. Together with a maximum of five face-up cards in the middle of the table, this must result in a more valuable combination than the opponent. If not, is playful all application, you will be eliminated, with empty hands and without the Chance to make a Comeback. Whether Christine Lagarde know? The French woman is not a professional poker player, but since 2019, the President of the European Central Bank (ECB).
And not long it took until she was forced into her role as Supreme guardian of the Currency of the continent to an “All In”. Similar to her predecessor, Mario Draghi, in the Wake of the financial crisis of 2008/09, the former Director of the International monetary Fund by the Corona-crisis urged to set monetary policy all the cards on the table. Since it might be helpful to know how to play poker successfully.
Christine Lagarde and the ECB: An “All In” To buying on the installment plan
the no-longer-existing bond program APP through which the ECB purchases on a monthly basis of securities for up to 20 billion euros, now comes the PEPP program. This was initially written on a 750 billion Euro. Now 600 billion Euro will be, once again, to a total of 1.35 trillion euros Packed. By the end of 2020, with a purchasing volume of € 100 billion per month adds up. The program will run until “the Phase of the Coronavirus-the crisis is over,” it said in a communication from the Central Bank. At least, however, until June 2021. Interest rates, meanwhile, remain unchanged and at historically low levels. The key interest rate is currently zero percent. For money, the financial institutions Park at the Central Bank, to fall 0.5 percent. Webinar with Marc Friedrich: How do you now protect your wealth
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Who goes in Poker, “All In”, does, either, because he is a game of profit is one hundred percent safe, is particularly brave, or because it has run out of Chips – that is to say out of desperation. In the case of the ECB, there is much to suggest the Latter. Basically, all application is now on the table. In the markets for Casino mood. In spite of all the risks to investors, and investors chase the prices of the world’s leading indexes back in the direction of the pre-crisis level. And yet the question Would have been a early “All-In” really necessary remains? Or it would have done a more defensive version of the game?
Euro-zone GDP could be around 8.7 percent
shrink “The latest signs suggest a sharp downturn, with a quick crash on the labour market, in industry and in services,” explained Christine Lagarde, the Almost-doubling of the originally specified use of The ECB estimates that the decline in GDP within the Eurozone this year to 8.7 percent. The world economy could shrink by six per cent, estimates the OECD. It was in times of peace, for over 100 years. The inflation rate in may of 0.1 percent – far from the Two per cent mark, which aspires to the Central Bank.
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In addition, the significant proportion of purchases of securities in government bonds of member countries of the Euro flows. “This is not important, because the yields of government bonds, in particular the core markets, are very low, and on a currency hedged Basis for the foreign investors,” says Jon Day, the Fund Manager of the BNY Mellon Global Dynamic Bond Fund the program. “The ECB can be, yields indifferent – is virtually the only buyers far and wide.”
Of these, especially the debt-ridden countries of the Eurozone, such as Italy or Greece, but also Spain and Portugal benefit. The bond purchases to stop the sell-out of the papers and improve as well as the low interest rates the debt sustainability of the countries.
thanks to the ECB money flood a debt crisis?
This has calmed the markets accordingly. What, however, in the short to medium term, for relaxation, in the long term could result in a debt crisis, fear experts. Finally, the unconditional flood of money the ECB could ensure that struggling States fault, at the expense of the more stable countries. With regard to the bond purchases that the Central bankers are increasingly their own limits. Greek bonds, for example, have not been taken into account, because its credit rating was too weak. In the corona of a crisis, this is no longer the case.
in Addition, The ECB exceeds the purchases of government bonds, in part, the capital key weighting of the shares of national Central banks in the ECB’s capital according to the proportions of the respective member States in the total population and GDP of the EU. The ECB acquired to 21.6 per cent of Italian bonds, the country only 17 percent of the capital key to but. “If the ECB deviates systematically from the capital key and no upper limits are set, you must allow yourself to accusations of monetary state financing, like”, criticized the CSU MEP Markus Ferber.
the EU Commission of the stability and growth Pact
The EU Commission wants to expose as a result of the pandemic on the stability and growth Pact and has enabled the General escape clause. “The step means that national governments can pump a lot of liquidity into the economy,” said EU Commission President Ursula von der Leyen. And also the so-called Corona-Bonds are not yet final from the table.
the risk of a debt crisis increases could be, at the end of a fragmentation of the currency Union. At the same time, the risk of inflation increases. Especially, asset price inflation could continue to rise. This would decouple the markets and the real economy of time more of each other, what is the recent price rallies close to the exchanges already. “One might be inclined to say that in the current Crisis, the end justifies the means. But this is a dangerous, uncivilized principle: Because, according to him would also be justified to ruin the purchasing power of the Euro, in order to keep the state’s coffers with cash,“ said Degussa’s chief economist, Thorsten Polleit.
“Extraordinary times require extraordinary Action.”, Christine Lagarde tweets, however. This extraordinary Act, but could draw also extraordinary times. From the ECB side, the cards are on the table, and the future will show whether they have been correctly played. That’s how it works, in the case of an “All In”.
ECB: First Inflation, then a new monetary order is coming – what the saver is in FOCUS ECB: First Inflation, then a new monetary order is coming – what is the for savers financial professional Marc Friedrich: the Corona is called the crisis was only the prelude to the great Crash of FOCUS Online financial professional Marc Friedrich: Corona-crisis was only the prelude for the great Crash
*The post “use our prosperity: In the fight against the crisis, Christine Lagarde, “All in” released ” by the stock exchange on Sunday. Contact with the executives here.
