Europe starts throwing money around

Global markets had a field day post the ECB’s latest new operation called Outright Monetary Transactions (OMT), seriously who comes up with these names?

Just to summarise what its all about:

  • OMT is an operation to buy govt bonds of troubled Euro countries (kicking the can down the road)
  • ECB doesn’t specify the amount of bond purchases (unlimited money!!)
  • Buttt there are a few conditions:
  1. The countries that the ECB will help buy bonds will have to apply for help and will have to be strict with their budget spending (no growth!)
  2. The countries will have to be under IMF’s scrutiny to make sure they comply with the austerity measure (no growth!)
  3. ECB will “sterlise” the funds printed to buy those govt bonds (take money out of private hands to give to the govts……no growth!)

Impact for Thailand? Meh

And now with the US job numbers worse than expected, commentators are shouting from the rooftops for a QE3. I believe the image below describes my thoughts best.

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