Bond buying futile without real public investment

Pressemitteilung der Fraktion GUE/NGL im Europaparlament

Jan 23rd, 2015

The European Central Bank has today announced it will respond to Eurozone deflation by buying sovereign bonds on the secondary market. GUE/NGL MEPs on Parliament's economic and monetary affairs committee (ECON) have raised their concerns about this massive quantitative easing programme.

Portuguese MEP Marisa Matias said: "The ECB has made a big fuss about what basically amounts to a super-sized version of the same thing. The ECB and European authorities are swamped with evidence that bond purchasing on the brink of deflation is futile without public investment programmes which create jobs and mobilise private investment."

"I have particular cause for concern over one curious aspect of Draghi's plan: the insane notion of risk sharing by national central banks would send the message that the ECB is preparing for a break-up. Such a message could trigger even more market scepticism towards the Eurozone and prove to be a self-fulfilling prophecy."

"The imposition of adjustment and reform programmes on member states as a condition for asset purchases is a political scandal and a complete breach of the ECB's mandate."

German MEP Fabio De Masi said: "Draghi continues to dope a financial system already flooded with liquidity. This will not revive the European economy which is in need of real investment. Interest rates are already at a record low, but the idiotic austerity straightjacket castrates both fiscal and monetary policies."

Portuguese MEP Miguel Viegas commented: "Today's announcement from the ECB reveals the complete failure of its policy and the limits of this European Union which shows itself once again unable to reverse the current deflationary cycle.

"This late intervention, revealing deep divisions about the nature of the ECB's instruments, comes late and confirms the failure of a set of measures that have been put into practice over the past few months: purchasing banking bonds, targeted longer-term refinancing operations (TLTROs), purchase ABS etc.

"Since this debt will be purchased on the secondary market, this means in practice the injection of millions of euros into the financial system without any guarantee that this will translate into more funds to the real economy. This will not get to the heart of the problem. If we continue with austerity policies that penalise workers, public investment and the possibility for member states to promote social policies that stabilise consumption, no palliative will boost investment and reverse the current deflationary cycle."

ECB's effective refusal to buy Greek bonds

"The poorly disguised announcement of additional criteria for the eligibility of Greek bonds is a further escalation of the European institutions' utterly unacceptable blackmail policy: a clear attempt to try and manipulate the results of the forthcoming Greek elections," added Marisa Matias

"At the climax of the crisis, the ECB accepted junk bonds from banks, so there is no reason why one country should be excluded now as central banks have huge discretion in their balance sheets," reiterated Fabio de Masi.