The European Central Bank (ECB)'s new tidal wave of quantitative easing (QE) proves that ECB President Mario Draghi is a "charlatan" who is abetting a massive heist by debt and currency speculators, according to former White House budget chief David Stockman.
There is no rational reason why the ECB announced this week if would purchase $1.24 trillion of existing sovereign bonds and other debt securities, said Stockman, head of the Office of Management and Budget under President Reagan.
"So today's program amounts to a giant bailout in the form of a big fat central bank 'bid' designed to prop up prices in the immense parking lot of French, Italian, Spanish, Portuguese etc. debt that has been accumulated by hedge funds, prop traders and other rank speculators since mid-2012," he wrote on his
Contra Corner blog.
"Never before have so few — perhaps several thousand banks and funds — been pleasured with so many hundreds of billions of ill-gotten gain. Robin Hood is spinning madly in his grave."
Stockman said Draghi's assertion that the action is necessary to boost growth and fight inflation that has somehow become too low is bogus.
"There is flat out no emergency that could possibly justify an ECB action which will result in the creation out of thin air of what amounts to fraudulent credit equal to nearly 10 percent of eurozone GDP in less than two years," he wrote.
"In short, Draghi is presiding over a gargantuan fraud and can't be so stupid as not to recognize it. Indeed, the dictionary definition of a 'charlatan' could not more aptly describe his current gambit."
Stockman said it should be no surprise that government 10-year bonds can hit 0.70 percent rates in Europe, since Europe is "drifting toward insolvency and/or ruinous taxation."
"So now begins the greatest heist since [former Federal Reserve Chairman Ben] Bernanke bailed out Wall Street in September 2008," he predicted.
At least one central bank expert is warning that QE in Europe is doomed to fail and could push the global financial system into a tailspin.
William White, a former chief economist to the Bank of International Settlements and now chairman of the Organisation for Economic Co-operation and Development's review committee, sees a new crisis approaching a boil, according to Ambrose Evans-Pritchard, international business editor of
The Daily Telegraph.
"We are in a world that is dangerously unanchored," said White. "We're seeing true currency wars and everybody is doing it, and I have no idea where this is going to end."
White said the global economy is considerably more stretched now than it was in 2008, with combined public and private debt about 20 percent higher than it was then.
A massive dose of QE stimulation in Europe could make the situation even worse, in White's view. "Sovereign bond yields haven't been so low since the Black Plague. How much more bang can you get for your buck?" he asked.