The Eurozone Is Going Down the Japan Route

The European Central Bank (ECB) announced a tapering of the repurchase program on Sept. 9. One would imagine that this is a sensible idea given the recent rise in inflation in the eurozone to the highest level in a decade and the allegedly strong recovery of the economy. However, there’s a big problem. The announcement is not really tapering, but simply adjusting to a lower net supply of bonds from sovereign issuers. In fact, considering the pace announced by the central bank, the ECB will continue to purchase 100 percent of all net issuances from sovereigns. There are several problems…