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Will Syriza's bark be worse than its bite?

  • The radical left-wing party Syriza seems bound to win Greece’s election on Sunday.
  • With Greece having most to lose if it left the euro, we suspect Syriza's bark will be worse than its eventual bite.

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ECB QE: Bazooka or fudge?

  • At tomorrow’s Governing Council meeting we expect the ECB to launch a QE programme of at least €500bn consisting primarily of sovereign bond purchases.
  • The programme’s effectiveness is likely to be diminished by concessions to the German-led opposition to QE.
  • Although beneficial, the programme’s economic impact is unlikely to be sufficient to return inflation rapidly to target.

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Draghi's QE Compromise

  • All signs point towards the ECB adopting sovereign QE in the New Year.
  • But given Draghi’s desire to appease the German-led opposition, the design of the policy seems bound to be second-best.

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Jump-starting Germany: A menu for Merkel

  • German policymakers need to act to jump-start the stalled economy.
  • But complacency, compromise and the near-religious obsession with the balanced budget suggest the German economy will remain sluggish.
  • That’s bad for Germany. And terrible for the euro area. 

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Draghi's ECB: Bottom of the table

The ECB now aims to return its balance sheet back to 2012 levels. But meeting that ambition, in the near term at least, is going to be extremely difficult. And, even if it can, both the nature and size of the balance sheet increase it implies is puny relative to what the world’s other major central banks have undertaken. 

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