Eco+Nomics

Been away for a while due to studying commitments... Following the decision of the ECB about the eligibility of the Greek bonds , I was initially panicked, too. However, after Karl Whelan's post things got straight. Now that I, finally, have some time, I checked the  balance sheets of the four largest  Greek Banks, from the 3rd Quarter (September 30,2014), with respect to the eligibility of collateral for weekly ECB MROs. These are the results, as well the depositsthese Banks owe: Piraeus Bank Group (in millions of Euros) ( link ) Greek Sovereign Debt: 567.1  Other Countries Government debt: 358.5 EFSF bonds and non- Greek IOUs: 14, 438.4 Deposits (Liability): 54, 824 On Sep. 30, 2014 the outstanding repo transactions - MRO, LTRO - with the Eurosystem (ECB & BoG) was 10 bn EUR; that is the Piraeus Banks had, at that time, absorbed liquidity of approx 10 bn from the Cebtral Bank - so, not that dependent after all. Group of the National Bank of Greece (in...

So, Mario Draghi said that an inflation much lower than 2% is against his mandate. And it is! If you ask me, early 2015 is the right time, if not too late, to buy sovereign bonds. Let me, please, tell you what I think. First of all, given that Eurozone economy is below its potential, inflation risk will remain low, and the zero lower bound will prevent monetary policy to be "hazardously" inflationary. But, this is an argument why we should not fear of inflation, if the ECB decides to take bold action. True! For now... Moreover, given that we remain below our potential output, member states have begun to deviate from austerity and call for more expansionary budgets. Sooner or later, they will start creating budget deficits as a mean of expansion. And this has two implications. The first one, which relates to my previous argument is that budget deficits will boost expansion, and, hence, the return to the potential output. Therefore, the later the ECB decides to act, the mo...

Just messing around...