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Look Out Bears! ECB’s Lagarde Wants Exceptionally Loose Money

The new ECB presidential nominee, Christine Lagarde, is advocating a Keynesian-type assault on financial markets (along with recommendation for fiscal stimulus) as Euro Zone inflation hits an anemic 1%.

(Bloomberg) — European Central Bank presidential nominee Christine Lagardepledged to act with “agility” against inflation that is persistently too low, signaling that she’ll follow Mario Draghi’s example in finding ways to keep monetary policy exceptionally loose.

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In a hearing at the European Parliament in Brussels over two and a half hours, Lagarde said the 19-nation euro zone must tackle near-term risks mainly related to external factors. (Heaven forbid that Lagarde would ever blame the Euro Zone’s protectionist trade mandates as a major problem). At the same time, she said the ECB must be mindful of the potentially negative effects of its unconventional policies and take people’s concerns about them into account.

“The challenges that warrant the ECB’s current policy stance have not disappeared,”said Lagarde, who ran the International Monetary Fund for the past eight years and is due to take over at the ECB on Nov. 1. “A highly accommodative policy is warranted for a prolonged period.”

Yes, I would call 1% inflation persistently too low.

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Of course, the ECB has already adopted a highly accommodative policy since 2008. But Lagarde want to keep on truckin’!

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In addition to a highly accommodative monetary policy, Lagarde is advocating protectionism for the EZ’s banks in the face of cryptrocurrencies. Lagarde claimed that regulation of cryptocurrencies is “inevitable” and necessary on an international level. She also said that blockchain innovators are “shaking the traditional financial world” and having a clear impact on incumbent players.

Incumbent players? Like Germany’s Deutsche Bank and Italy’s Banca Monte dei Paschi di Sienna? Deutsche Bank is down -93% since August 2007 while Banca Monte dei Paschi is down -99.98%.

Lagarde is also calling for the EZ to adopt fiscal stimulus. “I’m not a fairy”, she said. In remarks aimed at rich economies like Germany and the Netherlands, she said governments who “have the capacity to use the fiscal space available to them” should spend on improving their infrastructure.

I agree that Lagarde is not a magical fairy. At the IMF, Lagarde was involved with a massive “bailout” of Argentina. Argentina’s 2Y yield is now at a whopping 67.201% and a bond price of $45.092.

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And a 6-month CDS Sr CDS of almost 20,000.

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Hey Christine. Go sprinkle your magic dust somewhere else. It seems to be Roundup pesticide rather than magic dust.

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