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A critique of the ECB's liquidity policies | 66 comments (66 topical, editorial, 0 hidden)
Re: A critique of the ECB's liquidity policies (none / 0)
It looks that in 2007 overnight rates were pushed to a lower bound and have stayed there, punctuated by somewhat regular spikes upwards. This could be roughly consistent with the contraction of the shadow banking system's credit creation. Anyone who understood the implications of this metric would have suspected that trouble might have been looming, and conversely, those who suspected trouble could have produced the contraction.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 24th, 2011 at 09:20:34 AM EST
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Re: A critique of the ECB's liquidity policies (4.00 / 2)
The second graph is 2009, monthly. It certainly looks like deliberate intervention in midyear.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 24th, 2011 at 09:34:11 AM EST
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Re: A critique of the ECB's liquidity policies (none / 1)
This is a version of the chart I made for the Eurointelligence column

You can see the ECB last changed its interest rates on 13 May, 2009. That's when the heartbeat pattern begins.

The ECB's refinancing operations had switched to unlimited liquidity on 15 October 2008 (a month after Lehman and the week after the global markets crashed on a Friday and the IMF warned of "a global meltdown").

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Carrie (migeru at eurotrib dot com) on Thu Feb 24th, 2011 at 09:45:53 AM EST
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Re: A critique of the ECB's liquidity policies (none / 0)
The second graph is 2009...

:-/  Thanks, I mistook the months for years. Makes more, if different, sense now. Certainly a dramatic change in pattern.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Feb 24th, 2011 at 10:39:19 AM EST
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A critique of the ECB's liquidity policies | 66 comments (66 topical, 0 editorial, 0 hidden)
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