In the Summer of 2012, European Central Bank (ECB) President stated that the ECB was committed to doing “whatever it takes” to save the Euro and the EU.
Since that time, the ECB has cut interest rates even below zero (yes, the EU now has negative interest rates) and has implemented a large-scale asset purchase program.
All of these efforts have failed to kickstart the EU economy. Italy is back in recession for the third time since 2008. Germany’s economy contracted in the second quarter of 2014 and will likely be in recession before the first quarter of 2015. France has registered zero growth for six months now.
More telling is that fact that bad loans which now total over $1.1 trillion, an amount that as ZeroHedge has noted, is equal to 9% of Europe’s total GDP.
Between this and the ongoing insolvency of Europe’s banks (at leverage ratios of 26 to 1, one can reasonably argue that ALL major EU-based banks are insolvent), Europe’s last hope for success is believed to be a massive QE program in which the ECB buys sovereign bonds from EU nations.
However, this is unlikely to occur. If you think we are merely stating this because we are bearish on Europe, consider what Ben Bernanke told CNBC yesterday.
Former Federal Reserve Chairman Ben Bernanke predicted that the European Central Bank (ECB) would have a rough time implementing U.S-style monetary easing.
Speaking Wednesday at the Schwab IMPACT conference, the ex-central bank chief said the ECB faces political barriers to enacting such an aggressive program.
"The barriers to doing it are not really economic," he said. "The legal and political barriers being thrown up are going to make it very difficult to do that."
http://www.cnbc.com/id/102156211
Bear in mind, this is the same man who grew the Fed’s balance sheet from $800 billion to over 3.5 trillion, the man who personally oversaw multiple QE programs that directed money to European banks (the Fed’s QE 2 and 3 cash mostly went to European banks).
And he is openly stating that the ECB will find it “very difficult” to implement a QE program.
The European markets are deep trouble.
EU financials are already cratering:
Spain’s recovery is over:
Ditto for France:
Even the German “powerhouse” is breaking down:
The next round of the EU crisis is just around the corner. Are you prepared?
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