View: Euro Deflation

This chart mashup shows the Euro Zone experiencing sudden price deflation since 2012 along with negative momentum in loan creation to the non-financial sector. Business, Industry AND Labour have no pricing power and as a result, balance sheet repair (reducing debt, increasing assets) is de rigueur in Euroland. 

The European Central Bank Governing Council member Ardo Hansson said "...the ECB stands ready to cut borrowing costs further and is technically prepared to make its deposit rate negative; charging banks to hold their excess cash at the ECB in an effort to spur them to lend it to households and companies." (Bloomberg) 

Unfortunately that's not the way it works. Banks lend to credit worthy customers who want to leverage debt to grow their business. If the household sector is not spending, then the business sector has less income and no incentive to expand. More at www.chpc.biz