ECB, Lending to Private Still in Freefall

Sixteenth consecutive month of contraction in lending to private sector in the euro area. ECB, another disappointing speech this week in front of European Parliament by Mr Draghi, seems to believe that flooding banks with yet more liquidity is better than forcing them to lending through negative deposit rates.That would damp unsustainable euro overvaluation and improve competitiveness at those entities that mostly need credit. Without acting on the exchange rate exporters at peripherals will not gain competitiveness and will find it even harder to gain access to credit. After German elections ECB would really be in a condition to take a totally different stance at its next Governing Council meeting October 2nd.

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