Think about it, as LTRO triggers on the leap day TODAY, why is the Central Bank being forced to do this against its will? The European monetary transmission mechanism doesn't have an IMF-Equivalent; so not only is the euro a political mishmash at the concept level its a stool (sic) on two legs at the practical institutional level. 

EU Money supply is at rock bottom, the pump at the 'heart' of European money supply is on life support.

That 'life support' is LTRO from the Central Bank, right? The Central Bank should be independent right? It shouldn't be pumping up the very thing that it is chartered to control, that is perversity by definition right?

INTRODUCTION

It's LTRO[1] that I’m talking about this time! LTRO the latest version of “economic life support those” crackpot surgeons in the Central Banks and Treasuries of Europe have come up with. What is the issue with it? As LTRO2 approaches, to on the leap day (29/2/2012) I present a number of theses about LTRO;

1.      LTRO is a workaround for Crowding Out

2.      LTRO is executed via a process called 'Round Tripping' or known as a ‘Carry Trade’

3.      Hedge Funds are intrinsic to the success of LTRO

4.      This makes governments dependent upon Hedge Funds (& not just the banks)

5.      LTRO creates a cash balloon which props up the equity market

6.      LTRO is a high-risk central bank strategy which could deflate at a stroke

7.      Ironically the very Hedge Funds and Asset Managers who are intrinsic to the success of LTRO are already freaked out by the high risk nature of the policy,

A sequence model of German / ECB relations 2010 thru 2011 from the WSJ

charts from the ECB SDW