Well well well, it turns out the epic tLTRO invented by the ECB was actually a huge fail, we really feared this would have happened
(original publishing date: 09/19/14)
Ok, it’s better to have tLTRO than to have nothing, but we’ve got to acknowledge that this is not really going as the ECB was hoping.
Let us give you some numbers:
1) Only 82,6 bln € alloted
2) The maximum amount of money the ECB was willing to lend in the first auction to banks was 200 bln €
3) Everyone expects 267 bln € to be allocated in the first two auctions
We expect point 3 to be heavily reassessed (it will be really hard to get to 200 bln €).
If you want to visualize this disaster (tLTRO is here indicated as “LTRO 3″):
So, it looks like tLTRO may be way weaker than LTRO 1 and LTRO 2.
One more step towards a serious Quantitative Easing.