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By Ambrose Evans-Pritchard Economics Last updated: April 30th, 2012
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Mario Draghi, in carnival form - now providing liquidity
Mario Draghi's liquidity blitz is beginning to feed through into the EMU money supply. At last. This is the best news in months for Europe.
As you can see from the charts below (from the ECB's new data), real M1 deposits are rising briskly again in the core.
They are rising out of the depths of Hell for Europe's Arc of Depression. That is to say, the rate of collapse has slowed on a six-month basis from minus 5.6pc in February to minus 3.7pc in March. Be thankful for small mercies.
"It is still early days but a further recovery in peripheral real M1 would suggest an end to recessions by late 2012," said Simon Ward from Henderson Global Investors who collects the data.
The `narrow money ' MI figures have a lead time of about six months, so were are talking about a better autumn. Possibly.
This does not mean that the picture is good. The ECB said lending to business continued to fall across the eurozone in March. The credit crunch has not yet lifted.
"The ECB will undoubtedly be disappointed by these latest lending figures. Tight credit conditions remain a serious concern for Eurozone growth prospects," said Howard Archer from IHS Global Insight.
The jury is out on the ECB's three-year lending adventure (LTRO). It has helped, but the toxic side-effects are building up. Has it just stolen a sugar rush?
Since we are in totally uncharted waters, nobody really knows what is going to happen. This bear is not yet for turning, but I have great respect for monetarists. They have had a good run over the last five years.
Hats off to Draghi for now.
Tags: eurozone debt crisis, liquidity blitz, Mario Draghi
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