MacroScope

The ECB keeps putting up the cash, but where’s the lending?

Draghi and TrichetFor the European Central Bank, a lot is riding on euro zone banks ramping up lending to the private sector. Unfortunately, after a very long time, lending still is not growing. It fell 1.6 percent on a year ago in July.

Struggling with a dangerously low inflation rate that is expected to dip even further to 0.3 percent in August, the ECB placed a big bet back in June that hundreds of billions of euros more in cash for banks in further liquidity auctions in October and December this year would help turn the situation around.

The catch: instead of no strings attached, as its policy was in the past for allowing banks access to cheap money, these long-term refinancing operations (LTROs) will require banks to set aside some money to lend to the private sector. So these ones are targeted, hence why the ECB calls them TLTROs.

Private lending growth, the ECB says, will help bring inflation back up from near zero to the 2 percent target.

But as the chart below shows, the ECB has its work cut out for it.

It is well-documented that much of the past LTRO cash – over one trillion euros in two auctions alone during the depths of the sovereign debt crisis – found its way into the stock market as well as euro zone government bonds.

Immigrant small business owners: bringing big bucks to Main Street

What would Main Street America look like without immigrants?

Picture vastly fewer restaurants (37% of the industry’s ownership is foreign-born), hotels and accommodation (43% foreign-born ownership), dry cleaning and laundry facilities (54% foreign-born), and nail salons (37%). It would be that much harder to go out for a treat (bakeries, 32% immigrant-owned), fill up the tank (gas stations, 53%), or grab a bottle of wine on the way to a dinner party (beer, wine and liquor stores, 42%).

As President Barack Obama announces a big shift in immigration policy that will offer greater leniency to individuals under 30 who came into the United States as undocumented children, a new report from the New York-based Fiscal Policy Institute highlights just how broad a role immigrants play in the world’s largest economy.

In his speech this week, President Barack Obama hinted at the new policy:

If we truly want to make this country a destination for talent and ingenuity from all over the world, we won’t deport hardworking, responsible young immigrants who have grown up here or received advanced degrees here. We’ll let them earn the chance to become American citizens so they can grow our economy and start new businesses right here instead of someplace else.