Draghi Reiterates "Treaty Prohibits "Monetary Financing"; Market Sinks; Draghi Fuels then Sinks Rumor ECB will Step Up Bond Purchases; Europe Moves Towards Abyss
Mish Moved to MishTalk.Com Click to Visit.
The main news in today's European roundup is the reiteration by ECB president Mario Draghi EU Treaty Prohibits "Monetary Financing"
At a news conference in Frankfurt, European Central Bank President Mario Draghi said on Thursday that the European Union treaty prohibits "monetary financing." He was responding to a reporter's question about why the central bank doesn't ramp up its bond-buying program. He also said that the ultimate decisions and political responsibility are in the hands of EU leaders, which will meet in Brussels on Thursday evening and Friday.Draghi Fuels then Sinks Rumor ECB will Step Up Bond Purchases
The market has rallied for weeks on expectation the ECB would eventually get around to a massive bond buying program. The irony is Draghi personally fueled rumors the CEB would step up purchases (see ECB Ready to Push Boundaries on Interest Rates and Bond Purchases; One Size Fits Italy).
So Draghi got out of this what he wanted: A big plunge in Italian and Spanish debt yields, by doing nothing more than yapping.
The second irony is that Draghi is in essence a liar. He cannot come out and say the ECB is providing "monetary financing" with its bond purchases, even though that is exactly what the ECB is doing.
The ECB is under scrutiny by the German central bank, the German supreme Court, and German voter opinions. You have to give him credit for walking a fine line that has not brought out huge protests in Germany.
Europe Moves Towards Abyss
Fill Zuchi, native Italian, and founder of the Zebra Fund says Europe Moves Towards Abyss.