The European Central Bank is in big problems. The European economy is slowing down. The artificially low interest rates were intended to allow politicians and bureaucrats to make the structural change the economy needs. Unfortunately, they didn’t do this. With the lowering of economic activity, there is now a huge problem for everyone in the Eurozone.
The situation in Europe will remain going well. So long there is cheap credit and no inflation. That is exactly what we saw happening and what is changing.
One of the ECB problems is that the Euro is no global currency. The Euro has used in around 1 in 3 transactions worldwide.
If we look at the bond market than it is very clear what the ECB has done. There is a false sense of security in the bond market.
The ECB faces the same problems the FED has. If they return to the normal policies the bond markets will take the risks that are on the market in. But it also means that governments need to stop borrowing money like crazy.
The real problem is that they are caught in a trap and need to end it. But how? There is no real solution.