“The European Central Bank is preparing another dose of easing, as discussed at this weekend’s Jackson Hole summit. But, in terms of supporting underlying economies, as opposed to assuaging bloated financial markets, eurozone monetary policy is already exhausted, as it is across much of the world.
“Bond yields have never been this low – and, in many countries, are negative. Germany just issued 30-year zero coupon bonds, with investors committing money for three decades for no interest. Making ECB rates even more negative or doing further quantitative easing is likely to backfire, spooking markets more than it calms, but that won’t stop the Frankfurt panjandrums from trying. They could venture even deeper into the monetary rabbit hole, creating ECB money to buy not just eurozone bonds but equities too – turning European financial markets into a no-holds-barred Ponzi scheme.”The skies are darkening over Europe