# ECB calls for unlocking of EU Aid



## WolfeTone (19 Nov 2020)

Facing gloomy outlook, LaGarde calls for unlocking EU Aid

_"Christine Lagarde also said today that the European Central Bank could 'neither go bankrupt nor run out of money' even if it were to suffer losses on the multi-trillion-euro pile of bonds it has bought under its stimulus programmes. 
'As the sole issuer of euro-denominated central bank money, the Eurosystem will always be able to generate additional liquidity as needed,' Lagarde said in response to a question by an Italian member of the European Parliament."_

ECB looking for green light to keep the money printing-presses going. €750bn in 'aid'. That would probably equate to a minimum of €7.5bn for Ireland? A house for everybody, and perhaps a hospital or two, at 0% interest?
You have to ask, with this kind of thing of thinking and logic from the person in charge of ECB, why anyone is required to pay tax? What is it all for when at the end of the day the ECB has our back and can never run out of money?

On the other hand, the political impasse is another hurdle for the EU to surmount. Is it another crack in the EU veneer? Can there be an ECB without an EU?


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## WolfeTone (13 Dec 2020)

House prices increase 3.5% in a year

Probably deserving a thread of its own but mindful of a rule about discussing house prices, the most interesting aspect of this report is the perspective of the reports author, Rónán Lyons_:

 "If you had surveyed 100 economists at the start of the year, when there was only the first inklings of the potential impact of Covid-19, I doubt whether any in all honesty  would have predicted that such an economic shock would have caused property prices to rise, not fall, but yet that is what happened."_

Is he talking nonsense? Or is he correct in his assessment about any of a 100 economists getting economic forecasts for houses totally wrong on the midst of an economic shock?


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## Protocol (13 Dec 2020)

Here is some info on the planned 750bn COVID programme:









						Recovery plan for Europe
					

The EU Recovery plan is based on the largest long-term budget in the EU's history, boosted by NextGenerationEU. The largest stimulus package ever financed in Europe.




					ec.europa.eu
				



It is part of the 2021-2027EU Budget negotiations.


*NextGenerationEU*
NextGenerationEU is a *€750 billion temporary recovery instrument that will allow the Commission to raise funds on the capital market*. It will help repair the immediate economic and social damage brought about by the coronavirus pandemic. Post-COVID-19 Europe will be greener, more digital, more resilient and better fit for the current and forthcoming challenges.


*NextGenerationEU breakdown*

*Recovery and Resilience Facility (RRF)*€672.5 billion_of which, loans_€_360 billion__of which, grants_€_312.5 billion_*ReactEU*€47.5 billion*Horizon Europe*€5 billion*InvestEU*€5.6 billion*Rural Development*€7.5 billion*Just Transition Funds (JTF)*€10 billion*RescEU*€1.9 billion*TOTAL**€750 billion*
_Source: Conclusions of the European Council of 21 July 2020_



*Financing the EU long-term budget and NextGenerationEU*
The EU long-term budget will be financed through the resources of the EU.

The European Union will borrow on the markets to finance NextGenerationEU at more favourable costs than many Member States and redistribute the amounts.

For the Commission to start borrowing, the Own Resources Decision must be adopted by the Council and ratified by Member States’ national Parliaments.


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## Protocol (13 Dec 2020)

RRF grants allocation:



			https://ec.europa.eu/info/sites/info/files/about_the_european_commission/eu_budget/recovery_and_resilience_facility_.pdf
		


We get 853m in grants (loans?).


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## WolfeTone (13 Dec 2020)

If this money is to be raised on capital markets, at a time when the global economy is in need of stimulus, then surely we should be seeing upward pressure on interest rates? 
Or is this something that economists cannot explain either?


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## NoRegretsCoyote (13 Dec 2020)

The supply of loanable funds exceed demand. This keeps interest rates low.

The private sector's income has fallen less than its expenditure, so it is lending the surplus to the government.


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## Pinoy adventure (13 Dec 2020)

All that cheap money has too go sum where.it can't just go round and round.


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## WolfeTone (13 Dec 2020)

NoRegretsCoyote said:


> The supply of loanable funds exceed demand. This keeps interest rates low.



Indeed, but this is record levels of demand for loanable funds. If record levels of demand for loanable funds cannot exceed supply, and put upward pressure on interest rates, then when will interest rates ever rise again?


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## NoRegretsCoyote (13 Dec 2020)

WolfeTone said:


> and put upward pressure on interest rates, then when will interest rates ever rise again?


Possibly.

But Japan has had very low rates and inflation for a long time.


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## WolfeTone (13 Dec 2020)

Yep, and are caught in a debt trap.


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