Tuomas Malinen+ Your Authors @mtmalinen PhD econ. Chief Economist of GnS Economics. Adj. Professor of Economics @ Uni Helsinki. Economic growth, economic crises, monetary unions and central banks. Sep. 26, 2019 1 min read + Your Authors

There's again turbulence in the #ECB. The resignation of S. Lautenschläger, a senior German member, was a shock to many.

However, behind her departure is a long list of bad policy decisions. 1/
@CNBCJulianna @oliviabvoz @CNBCJou @Amdalleq @DiMartinoBooth

That list starts from the 'Outright Monetary Transactions' (OMT) program, the #ECB launched to bring down the borrowing costs of countries during the 2011/2012 debt crisis.

In this M. Draghi succeeded 👇, but the price was steep. 2/

Many don't know, but the "zombification" of the European economy started from the OMT program.

This recent article documents that the OMT program enacted zombie lending.👇

So, the price of rescuing the #Eurozone was an economic decay. 3/

Things got materially worse, when the #ECB enacted negative interest rates in June, 2014.

Slowly but surely they started to erode the European banking sector, which has been in a bad shape since the 2008 crisis.

Recently, banks have hit back 👇. 4/

To "seal the deal", the #ECB started its asset purchase (QE) program in March 2015.

It pushed sovereign bond yields to unnatural lows:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2933567 

And further eroded the banking sector by pushing them towards riskier lending.👇5/

Our banks are teetering, capital markets are in a bubble, zombie corporations are abound and #recession looms.

The #ECB has effectively destroyed the economy of the #Eurozone and left no ammo for the impending #recession. 6/

So, is it really a surprise that, as last stand against the destructive policies of the #ECB, one of it senior member resigns?

No, because the ECB has become the biggest risk to economic and financial stability in the #Eurozone. 7/

We just have to hope that someone will stop this money conjuring madness before it also destroys our monetary system.

Our judicial system (ECJ) has become a joke by allowing the ECB to (effectively) break the Article 123 of the TFEU with its QE. 👇 8/

Our hope now lies with the German Constitutional Court and/or some brave politicians, who would have the courage to rally against the #ECB madness to save what's left of our economy.

In any case, the situation is dire. 👇/end

You can follow @mtmalinen.


Tip: mention @threader_app on a Twitter thread with the keyword “compile” to get a link to it.

Enjoy Threader? Sign up.

Since you’re here...

... we’re asking visitors like you to make a contribution to support this independent project. In these uncertain times, access to information is vital. Threader gets 1,000,000+ visits a month and our iOS Twitter client was featured as an App of the Day by Apple. Your financial support will help two developers to keep working on this app. Everyone’s contribution, big or small, is so valuable. Support Threader by becoming premium or by donating on PayPal. Thank you.

Follow Threader