by Mish

German target2 imbalances exceed levels hit in the Eurozone crises in 2012. Things improved considerably after ECB president Mario Draghi made his famous statement “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough”.

The ECB claims this action is due to its bond-buying program. I strongly disagree.

For further discussion including my email exchange with the ECB regarding target2, please see Fuse is Lit! Target2 Imbalances Hit Crisis Levels: An Email Exchange With the ECB Over Target2.

Also consider:

  1. Germany’s Finance Minister Blames ECB For German Trade Surplus; Why the Eurozone Will Destruct
  2. Michael Pettis Calls Surplus Trade Statements by German Finance Minister “Utter Lunacy”

Finally, note that Italy is on ECB life support. Should Draghi halt QE asset purchases, demand for Italian bonds will plunge. For discussion, please see Draghi’s Dilemma: Eurozone Inflation Hits 2% with Italy on Bond Life Support.

Mike “Mish” Shedlock

Another Look at Capital Flight in Italy and Spain: ECB’s Target2 Explanation is False

The ECB claims that Target2 does not represent capital flight. Evidence says the ECB is wrong, especially for Italy and Spain.

Capital Flight in Italy, Spain Intensifies: Italy Target2 Balance Hits Record Negative

The ECB statistical data warehouse released Target2 Balance figures today. The numbers are reflective of intensifying capital flight in Italy and Spain.

Capital Flight in Eurozone Continues

Capital flight from one Eurozone country to another, continues to rise. That capital flight is a measure of trust of of a nation’s banks.

Target2 Imbalances Grow: ECB Overtakes Greece as Third Largest Debtor

Target2 imbalances in the eurozone continue to mount. The ECB itself now has the third largest negative balance following Italy and Spain.

BIS Blames ECB for Rising Target2 Imbalances: Fear of Default

In the latest BIS Quarterly Review, the BIS points a finger at the ECB for rising Target2 imbalances.

Italy Capital Flight Escalates: Highest Two-Month Total Ever

Capital Flight in Italy escalates at a record pace. It's seen in Target2 balances and spreads rather than an EM crisis.

Capital Flight to Germany in Full Swing

Capital; flight to Germany, the Netherlands, and Finland is in full swing. These sums cannot be paid back.

Fuse is Lit! Target2 Imbalances Hit Crisis Levels: An Email Exchange With the ECB Over Target2

Eurozone Target2 imbalances have touched or exceeded the crisis levels hit in 2012 when Greece was on the verge of leaving the Eurozone. Others have noted the growing imbalances as well.

Italy Target2 Imbalance Hits Record €432.5 Billion as Dwindling Trust in Banks Plunges

Contrary to ECB propaganda, Target2 imbalances are a direct result of an unsustainable balance of payment system. The imbalances represent both capital flight and debts that can never be paid back. If you think Italy can pay German and other creditors a record €432.5 Billion, you are in Fantasyland.