The Weekend Economists travel the Yellow Brick Road, November 14-15.

[Demeter]

15. German economic advisers say ECB policy a threat to financial stability

GERMANS WANT THE QE TURNED OFF...THE FEAR OF WEIMAR INFLATION STRIKES AGAIN!

http://www.reuters.com/article/2015/11/11/germany-economy-ecb-idUSB4N11702Y20151111#Wv4fZkp7cFeoF8Tw.97

The German government's panel of economic advisers warned on Wednesday that the low interest rate policies of the European Central Bank (ECB) were creating substantial risks for financial stability and could ultimately threaten the solvency of banks and insurers. In its annual report on the state of the German economy, the panel of experts known as the "wisemen", although it now includes one woman, forecast growth of 1.7 percent this year and 1.6 percent in 2016.

The group of five economists described the costs of the refugee crisis as "manageable" for the German government, estimating that the influx would lead to additional public outlays of up to 8.3 billion euros in 2015 and up to 14.3 billion euros next year.

But the council criticised the policies of the ECB in unusually stark language, saying it was creating "significant risks to financial stability."

"If low interest rates remain in place in the coming years and the yield curve remains flat, then this would threaten the solvency of banks and life insurers in the medium term," the council noted in the report.

"The ECB is not taking the looming risks to financial stability into account in its monetary policy decision-making," the council added.