ECB

November’s press conference by European Central Bank President Mario Draghi comes a week after the US Federal Reserve ended its monetary stimulus programme, and the Bank of Japan put a rocket booster under its already large volumes of bond buying.

In contrast, investors and analysts are expecting the ECB’s monetary policy committee to sit tight this month. It has announced that rates remain at a record low and predictions are for no change in its private-sector asset buying programme. But with eurozone deflationary fears showing no signs of receding in the stagnating economy, investors will be wanting Draghi to instil confidence in markets that he has his own bazooka ready to fire. By Lindsay Whipp and Emily Cadman

 

Claire Jones

The European Central Bank will today flesh out details of its plan to buy bundles of loans sliced and diced and repackaged into products known as asset-backed securities, alongside covered bonds.

With growth stuttering and inflation falling to a five-year low, some fuel for the eurozone’s recovery is much needed.

The ABS plan could provide it, freeing up space on banks’ balance sheets to spur lending to the region’s businesses and households.

Why is the ECB doing this now? Read more

  • The US president’s thicker skin and conviction that he can transact little business with Congress means he is using his executive authority to shape policy – and his legacy.
  • The next king of Spain will need to work hard to restore faith in the Bourbons, says the FT’s Tobias Buck.
  • Not one of the ECB’s new measures addresses the problem of low inflation directly, says Wolfgang Münchau.
  • This week’s Ofsted report that is expected to warn of hardline Islamist teaching creeping into a handful of British schools will revive the debate on whether a much broader push is needed to combat extremism in the UK.
  • Even before the bribery allegations concerning Qatar’s World Cup bid emerged last Sunday, the young emir of the gas-rich state had reason to believe the world was turning against his country.

Football interlude:

  • Young prodigy Cassiano de Jesus has captured the footballing world of Brazil where the sport is one of the few equalisers in one of the planet’s most unequal countries.
  • Four years after the last World Cup, residents of South Africa are still waiting to see its legacy.
  • Lionel Messi “rejected the advances of Spain’s national team to choose Argentina, the land of his birth, only to find that he could never really come home.”

 Read more

(EPA)

Do last week’s German constitutional court ruling lambasting – but failing to overturn – the ECB’s crisis-fighting bond-buying programme and Matteo Renzi’s ousting of Italy’s prime minister Enrico Letta have anything in common?

In the view of many ECB critics, particularly in Berlin, the two are not only related, but one may have caused the other. Read more

Tony Barber

German Constitutional Court (Matthias Hangst/Getty Images)

We don’t like what the European Central Bank is doing – but if someone is going to drop a nuclear bomb on the eurozone, it won’t be us. This seems to be the main message in today’s judgment from Germany’s constitutional court on the ECB’s Outright Monetary Transactions programme.

The OMT is an initiative aimed at saving the eurozone with large-scale ECB purchases of the bonds of governments vulnerable on financial markets, in return for a commitment to deep-seated economic reforms. Germany’s Bundesbank and much of the German public have never warmed to the OMT – even though the programme has never actually been used and, some experts think, never will be.

So the German court’s judgment will come as a relief to Mario Draghi, the ECB president, and all those who hold that the OMT, unveiled in August and September 2012, is the single most important reason why Europe’s monetary union no longer appears in mortal danger. But mixed with this relief will be a feeling that the German court’s judgement is not entirely helpful – and that some of its arguments are not particularly well-founded. Read more

By Luisa Frey
♦ Many Iranians were disappointed after the recent failure to reach a nuclear deal, but instead of the country’s chief nuclear negotiator, Mohammad Javad Zarif, they are blaming France.
This year’s Ashura celebrations look different in Beirut. Alongside the traditional tributes to the Prophet Mohammed’s grandson Hussein, posters show young men killed in Syria’s civil war.
♦ It is estimated that 48,000 people are missing in Syria – victims of forced disappearances, massacres and executions. DNA advances are now helping to identify bodies from mass graves and bring warlords to trial, says a special report from The Guardian.
♦ In Europe, Poland struggles to break its dependency on coal power. One of Europe’s most coal-reliant economies, the country is a rather unlikely host for this week’s UN meeting on climate change.
♦ If ECB does not act, the euro risks resembling the yen of the 1990s and 2000s, says Mansoor Mohi-uddin, managing director of foreign exchange strategy at UBS.
♦ In China, population aging has not only social outcomes, but also affects economic performance and the country’s international competitiveness, writes Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations. Read more

A protestor outside the Greek parliament (Milos Bicanski/Getty Images)

It’s no secret in Athens that austerity-weary Greeks would like to see a grand coalition emerge from Sunday’s elections in Germany. The participation in government of Peer Steinbrück and his Social Democrats, say café pundits, could bring a softening of the “keep-them-on-the-reform-treadmill” approach associated with Angela Merkel’s previous term as chancellor. Read more

Graffiti outside the ECB’s future headquarters. (Getty)

Could the European Central Bank be learning a thing or two about managing the message? Ahead of Thursday’s interest rate-setting meeting, when policymakers will want to do nothing more than say “we’re holding steady”, it looks like the bank may come up with an eye-catching announcement to give everyone something to write about.

That something is the long-running and vexed question of why the bank that loves to tell you how transparent it is (well, at certain times, once you’ve cleared security and as long as you understand no quotes should be used from this conversation) keeps the minutes of its governing council meetings secret for 30 years. The practice makes it an outlier – the Federal Reserve, Bank of England and Bank of Japan all publish minutes of their monetary policy meetings within a month of the meeting that they cover.

 Read more

♦ A recent ECB study asked what effect policy makers’ comments had on euro area sovereign bond yields: the FT’s Michael Steen thinks “it is hard to resist the temptation of wondering whether senior central bankers have heeded the warning.”
♦ The assertiveness of the Gulf petrostate monarchies over Egypt is a sign of their restored political confidence, but such a position is not without its problems, says Michael Peel.
♦ Morocco is cited as a model for Arab monarchies facing demands for democratic change, but critics argue that it illustrates how elites can maintain power behind the scenes.
♦ Foreigners earned less than 1 percent a year investing in Chinese stocks, a sixth of what they would have made owning US Treasury bills. Quartz, however, broke down the components of the stocks: “Companies that cater toward the Chinese consumer, which represent just under 11% of the MSCI and 6% of the HSCE index, tend to be a much more profitable, and they’re better performers than SOEs.” The upshot? China’s population has benefited, even if foreign investers haven’t.
♦ Latvia’s new tax laws mean it could be a “Luxembourg for the poor.”
♦ The custom of forcibly marrying girls off to resolve family and tribal disputes is continuing on an alarming scale across all provinces of Pakistan.

 Read more

♦ Ireland’s head of state says the EU must drop its “hegemonic” economic model and reform the ECB, or risk social upheaval and a loss of popular legitimacy.
♦ The Great Tax Race series turns to Ireland, looking at how Ireland has remained attached to aggressive tax policies that favour businesses even as ordinary people have struggled to get by. (If you’re trying to get your head around how all of this even works, watch this handy explainer from Matt Steinglass)
♦ Richard McGregor thinks President Obama needs to circumvent Congress if he wants to get his agenda moving.
♦ Western clothing companies are scrambling to address public concerns over working conditions in Bangladesh – the Walt Disney Company ordered an end to the production of branded merchandise in the country before Rana Plaza collapsed. John Gapper today makes the argument against western companies withdrawing: “Despite everything, the industry provides better-paid jobs than the alternative – working on rural farms – and has helped to emancipate women.”
♦ Despite violence and corruption, Afghan entrepreneurs are still making opportunities for themselves.
♦ The Kremlin is putting pressure on VKontakte, a Russian Facebook clone, pushing CEO Pavel Durov to leave the country.
♦ Slate is publishing a series of excerpts from the memoirs of Mohamedou Oul Slahi who was a prisoner at Guantánamo for nearly 11 years.
♦ Mafia historian goes underground into the bunkers of the Ndrangheta, Europe’s biggest cocaine traffickers and Italy’s most powerful organised crime group.
 Read more