Bundesbank´s Weidmann:"ECB intervention would be violation of laws."

[ASusilovic]

The president of Germany’s powerful Bundesbank has firmly rebuffed international demands for decisive intervention in the bond markets by the European Central Bank to combat the eurozone debt crisis, warning that such steps would add to instability by violating European law.

Bundesbank president Jens Weidmann told the Financial Times that only politicians could resolve the crisis, and he rejected the idea of using the ECB as “lender of last resort” to governments.

....

Mr Weidmann highlighted the stance being taken by the Bundesbank by arguing governments, not central banks, were mainly responsible for ensuring financial stability. Mario Draghi, the ECB’s new president, has said it is not the ECB’s job to act as lender of last resort, but Mr Weidmann went further, saying such a step would breach Europe’s ban on “monetary financing” – central bank funding of governments.

“I cannot see how you can ensure the stability of a monetary union by violating its legal provisions,” Mr Weidmann argued. “I don’t see how you can build trust in a system that violates laws.”

http://www.ft.com/intl/cms/s/0/641237a8-0dcd-11e1-91e5-00144feabdc0.html#axzz1dW1SCanw

Germany and the Bundesbank are living in dreamland. I am just waiting for Germany´s exports to crash into oblivion. Maybe they will begin to be more humble. Sell as much German stocks as you can. This is ridicuolous.

 

[Butterball]

I can't wait until Weidman gets a call from Merkel ordering him to buy DAX futures.

 

[Wallace]

good one

 

[C6H12O6]

Quote from Butterball:

I can't wait until Weidman gets a call from Merkel ordering him to buy DAX futures.

Just wait until the "market" realizes state owned bank KFW hides 400 billion of debt and german real debt/gdp is at least 100%

 

[Martinghoul]

Quote from C6H12O6:
Just wait until the "market" realizes state owned bank KFW hides 400 billion of debt and german real debt/gdp is at least 100%

KfW isn't hiding anything... Everyone knows what it has. Moreover, KfW has actual assets.

 

[C6H12O6]

Quote from Martinghoul:

KfW isn't hiding anything... Everyone knows what it has. Moreover, KfW has actual assets.

Everyone ? Then why KFW debt is guaranteed by Germany but is not accounted in german debt ?

 

[Martinghoul]

Quote from C6H12O6:
Everyone ? Then why KFW debt is guaranteed by Germany but is not accounted in german debt ?

Not accounted by whom? As an investor in German debt, I know all about KfW. I am also pretty sure the ratings agencies are on top of it.

Look, I know you feel stongly about these things, but you should really make an effort to be a little more impartial.

 

[C6H12O6]

Quote from Martinghoul:

Not accounted by whom?

I just wrote it, you seem misinformed. German debt together with KFW debt is at least 100% GDP, they are allowed not to account it and pretend it's 82% thanks to a legal bookkeeping artifice (i don't have the link at hand, i have to google it again).

Then I'm reading of accounting mistakes and off-balance sheets, last week they found a 55 billion error ? It seem all greek bookkeeping to me.

 

[Martinghoul]

Quote from C6H12O6:
I just wrote it, you seem misinformed. German debt together with KFW debt is at least 100% GDP, they are allowed not to account it and pretend it's 82% thanks to a legal bookkeeping artifice (i don't have the link at hand, i have to google it again).

Then I'm reading of accounting mistakes and off-balance sheets, last week they found a 55 billion error ? It seem all greek bookkeeping to me.

Well, you just wrote it, but, with all due respect, I know nothing about you and whether you know what you're talking about (to be sure, you can definitely say the same about me). My point is that, as a mkt participant, I am an investor in Germany, both govt bonds, as well as KfW, Pfandbriefe, etc (you may believe me or not, as you see fit). I am telling you that the mkt is aware of KfW and its debt. It's also aware of KfW assets. Moreover, it's aware of the FMS Wertmanagement (formerly Hypo Re) assets, where the €55bn "bounty" was discovered.

If you wanna talk about off-balance sheet liabilities, surely you'd agree Germany isn't the first place to look?

 

[trade2live]

Quote from ASusilovic:

The president of Germany’s powerful Bundesbank has firmly rebuffed international demands for decisive intervention in the bond markets by the European Central Bank to combat the eurozone debt crisis, warning that such steps would add to instability by violating European law.

Bundesbank president Jens Weidmann told the Financial Times that only politicians could resolve the crisis, and he rejected the idea of using the ECB as “lender of last resort” to governments.

....

Mr Weidmann highlighted the stance being taken by the Bundesbank by arguing governments, not central banks, were mainly responsible for ensuring financial stability. Mario Draghi, the ECB’s new president, has said it is not the ECB’s job to act as lender of last resort, but Mr Weidmann went further, saying such a step would breach Europe’s ban on “monetary financing” – central bank funding of governments.

“I cannot see how you can ensure the stability of a monetary union by violating its legal provisions,” Mr Weidmann argued. “I don’t see how you can build trust in a system that violates laws.”

http://www.ft.com/intl/cms/s/0/641237a8-0dcd-11e1-91e5-00144feabdc0.html#axzz1dW1SCanw

Germany and the Bundesbank are living in dreamland. I am just waiting for Germany´s exports to crash into oblivion. Maybe they will begin to be more humble. Sell as much German stocks as you can. This is ridicuolous.

The Bundesbank is the last bastion of monetary common sense to guard Europeans against those who have abandoned all basic principles. Let's face it central banks aren't going to save the day, a recession is not that bad , even a lost decade is not that bad , ask the Japanese, they are doing OK. Printing money on the other hand is evil .