Target 2 and Capital Flows

The box on pages 34-35 in this Bundesbank article explains the role of central bank flows during the euro crisis (the figure is especially interesting).

12 thoughts on “Target 2 and Capital Flows”

  1. So the Bundesbank is as bankrupt as the Irish Central Bank then.

    ’cause they ain’t getting all that money back.

  2. @ Greg

    Yes Greg, it is not good for them and remember this is the strongest bank in Europe. No doubt though it will pass the stress test with flying colours.

  3. @ Ordinary man

    “Germany is comitted.”

    What is Germany?

    It is nothing.

    German politicians would have their “people” believe they work as servants of the German public just as Irish politicians do.

    The German “Central Bank” is “owed” €350Bn from other Euro Central Banks.

    The Irish “Central Bank” “owes” €150Bn of that.

    The Greek “Central Bank” “owes” €100Bn of that.

    The Portuguese “Central Bank” “owes” €50Bn of that.

    Call that €300Bn.

    Allowing for the graph. Call it €275Bn “owed” to the German “Central Bank”.

    Do you see it Ordinary Man?

    All three countries are going to be asset stripped.

    Then the ECB will monetise the debt.

    Do you see it Ordinary Man?

    What do you think I mean Ordinary Man?

  4. Robert Browne:

    “No doubt though it will pass the stress test with flying colours.”

    😆

    Like it.

    Of course you don’t have to pass a stress test when you can print money.

    The German people will soon realise that they can’t do it.

    If Anglo could have printed “money” they would not have gone bankrupt.

    What is happening now, in Ireland, is the very definition of treason.

    The Nation will be stripped of everything of worth.

    The ECB is “printing” money and giving it to Deutsche Bank.

    Don’t expect any “trained” Keynesian “Central Bank” economist to accept that.

    It is their Religion.

    They don’t accept Heretics.

  5. ‘… deliberate decision of the ECB Governing Council’ (p.35). Quite!

    Anyone willing to give Professor Sinn a tutorial? No takers? Ah well … s’pose he’ll have to ‘ponder’ away and ‘pine’ for the lost glory of the D-mark!

  6. Philip

    I found the table of German exports / imports by region very very interesting.
    Approx 40% export to EZ countries and 20% to other EU.
    BRIC exports account for just 10%.

    And I recall reading comments that ‘China is now Germany’s most important export market’
    What a load of rubbish.
    It is crystal clear from the report that German exports are still absolutely dependant on vibrant EZ and EU economies.

    Somebody should stick those figures under the noses of the native ECB hawks and the editors of the German tabloids.

  7. One never stops learning. This week it is the fascinating subject of Target2. BTW why is it called that? Where is David McWilliams when we need him?

    Interesting comment towards the end that if, say, Ireland defaults on its Target2 everybody loses according to some formula and the Bundesbank isn’t especially vulnerable simply coz it is a big Target2 creditor.

  8. a salient quote from the above link

    SPIEGEL: It’s been almost two years since the financial crisis reached its climax. Has the worst been overcome?

    Steinbrück: No one knows. There are still deep-seated structural problems that threaten the economic balance in the world: Between the United States and China, for example, but also within Europe. We have taken a few steps toward taming the financial markets, but we haven’t come nearly far enough to rule out a repetition of the crisis. The most important question hasn’t been answered yet: Who’s in charge, politicians or the financial industry?

  9. @Ordinary Man

    Thanks for Steinbruck quote.

    The most important question hasn’t been answered yet: Who’s in charge, politicians or the financial industry?

    From where I stand on the terraces, the financial industry has won all the rounds so far. Maybe the people in the stands with the prawn sandwiches are not watching the game or won’t be affected by the result either way.

  10. @ Joseph Ryan

    Unfortunately, you may not be far wrong on that one.

    I met Steinbruck at a reception in the German Embassy London in 2004 whilst he was ‘Prime Minister’ of North Rhine West Phalia. We got chatting about his speech and I commented that it sounded like a ‘Universal Declaration of Independence’ – he laughed and a general discussion took place regarding the industry and wealth creation of NR West Phalia in a German context (I was working just north of Berlin in the ‘Old East’).
    ‘Like Germany in Europe.’ he remarked
    ‘Interdependent.’

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