[Skybird]

The AdG writes:
--------------------------
Madame Clueless and the balance sheet fraud at the highest level

The price value of the ECB's bond-buying programs urgently needs to be adjusted downward. But this is not happening. This is balance sheet fraud at the highest level. But the ECB is a notorious lawbreaker. The question, however, is how long this game will last without citizens revolting.

At 2:45 p.m. on 10/27-22, an increasingly uncertain-looking ECB President Lagarde attempted to explain the Governing Council's monetary policy decision to raise all three interest rates by 0.75 percent. This non-news - the markets had already anticipated such an increase - hides the ECB's ever-growing problem: that in the "targeted longer-term refinancing operations" (TLTRO-III), it no longer wants to keep its promise to banks to bonus the loans lent out by means of special fees.

Already in 2019, in the third phase of the TLTRO operation, which is technically difficult to understand, voices had been raised rejecting a central incentive control of lending through bonified loans by the ECB in view of the overflowing liquidity. Today, the ECB is faced with the difficult-to-communicate problem that TLTRO-III has become a significant source of income for banks, which must now be shut down. The business model enabled by the ECB was quite simple: banks borrowed low interest TLTRO and reinvested the money at the ECB/Eurosystem since the interest rate turnaround because deposit rates there were 0.5 percent. These windfall profits - not even discovered by Madame Lagarde for a long time - were increasingly problematized by the expert public.

So while the ECB chief was ranting about cultural diversity and her faith in people in summer interviews with tabloid media, the more knowledgeable staff at her institution were addressing the TLTRO danger. In the Oct. 27 press conference following the Governing Council, the decision-makers within the ECB did not want to overwhelm Madame Lagarde with explanations of the TLTRO course change. Therefore, shortly after the conference, the end of the TLTRO program in its current form was published as a "technical recalibration statement."

How long will this game last?

Quite incomprehensible are the decisions to continue the reinvestment of the bond-buying programs, which is flushing triple-digit billions onto banks' balance sheets and flooding the market with liquidity at a time when liquidity-absorbing measures would be appropriate given the inflation rate of over 10 percent for October. Again, the ECB is at odds with reality and failing to meet its obligation to justify its actions.

Of course, Ms. Lagarde's amateurish statements fail to mention the ECB's crucial problem. The interest rate hikes that will now follow will reduce the market value of the approximately 5 trillion bonds in the euro system. With a reduction in value of an estimated 400 billion euros per one percentage point of additional interest, the ECB or the euro system would have to report considerable losses, which would even eat up the equity cover of the national central banks - not to mention their own capital cover. Ms. Lagarde does not say a word about this, because the ECB has authorized itself to continue buying bonds at the historical purchase price in the future.

This is balance sheet fraud of the highest order. But the ECB is not only a sovereign dictator, it is also a notorious lawbreaker. The question, however, is how long this game will last without the citizens revolting. After all, central banks belong to the respective people, not to anonymous technocrats in Brussels. This also applies to the Bundesbank. Dr. Joachim Nagel, its president, should remember this as soon as possible.
--------------------------

This super-stupid woman is a hollow torso without a brain, and she always was like this. Babbling stupid drivel all her "careers" long, I cannot recall to have ever received a signal from her that could qualify as a sign for intelligent life.

Ein warmer Furz im Abendwind.