European GDP disappointed for Q2, which was only surprising to those expected something out of QE. At +0.3% (Q/Q), the European economy is clearly stuck in the same mindless rut that has taken hold since the 2011 crisis re-flaring. While recent convention holds, in light of this year’s QE, that the ECB has been idle during this time that simply isn’t true. Since 2011 (and really May 2010 with the first “buying” program) the ECB has intervened every which way possible. QE is really just a continuation of the same via a different methodology.
Just in the past year, the ECB’s heavy hand is obvious. Interbank markets are completely upended as if that form of monetarism was tautological. This was pure experimentation, particularly as rates sunk below zero. The effects of all that are certainly debatable, though seemingly deliberated against by the very fact QE was implemented not long thereafter, but what is not in doubt is that monetarism has been a constant feature in Europe for years now with increasing emphasis.
At this point, given at least the uncertainties, it becomes clearer that they are just throwing whatever they can at the system to see if anything might work – to the point it might all, in the end, be disruptive itself. In their last monetary policy statement, released yesterday, the ECB takes to bland platitudes as if all of this is just somehow now normal:
In the euro area money market, the decline in interest rates had been limited, despite the large increase in excess liquidity. The EONIA had averaged -11.8 basis points since the beginning of the current maintenance period, compared with -9.8 basis points in the previous period. Overall, short-term money market rates had remained broadly stable, unaffected by the re-pricing in bond markets and by the uncertainty