A German constitutional court has allowed the new European bailout fund, the European Stability Mechanism (ESM), to go forward, with only one condition that appears surmountable.
|By: David Dayen Thursday September 6, 2012 9:55 am|
European Central Bank President Mario Draghi wrapped up his major press conference this morning, and the news was pretty much what we heard yesterday. Draghi announced the formation of the OMT, or Outright Monetary Transactions. It’s an unlimited sovereign debt purchase scheme for those countries which submit to giving the ECB a vote on their fiscal policies.
|By: David Dayen Wednesday September 5, 2012 11:10 am|
This is about the worst possible policy announcement the ECB could make. The only hope is that the bond market finds it credible enough to never test it.
|By: David Dayen Tuesday September 4, 2012 10:40 am|
Yesterday I noted what a consequential week this would be for the European economy, as the European Central Bank prepared to make its decision on how to deal with soaring bond yields in Italy and Spain. ECB President Mario Draghi let some of the cat out of the bag yesterday, hinting that the central bank would purchase short-dated sovereign debt instruments from those nations. Just hinting at this is already affecting markets.
|By: David Dayen Monday September 3, 2012 11:00 am|
We have another week where the speeches at a national convention won’t be the most important in the context of the world economy. The European Central Bank meets this week amid high expectations that they will take action to finally arrest the unusually large bond price spikes from troubled Eurozone sovereigns like Spain and Italy. Shares in European stock markets drifted higher in anticipation of the announcement of a program to purchase bond debt from those countries and push the yields lower. However, that may not be part of the initial announcement this week
|By: David Dayen Tuesday August 21, 2012 10:00 am|
The European Central Bank spent most of yesterday rejecting any hope of an imminent intervention in the European bond markets, to put a cap on the spread between the yields of the cheapest and most expensive sovereign bonds. But Ambrose Evans-Pritchard of the Telegraph (UK) not only confirmed the existence of the program, but said Germany would get behind it.
|By: David Dayen Monday August 20, 2012 9:25 am|
According to the German magazine Der Spiegel, the European Central Bank has floated a scheme to set limits on bond yields for sovereign debt among member nations in the Eurozone, essentially through a mass bond-buying program. But the ECB quickly put out something like a denial.
|By: David Dayen Monday August 6, 2012 8:20 am|
Bond yields in the trouble spots of Europe have actually come down a bit, as observers get more comfortable with Mario Draghi’s unfolding strategy at the ECB. He appears now to have at least qualified approval from Merkel’s government, if not from the German Central Bank, provided the German Supreme Court finds the use of the bailout mechanism to support bond purchases permitted by the German Constitution.
|By: David Dayen Thursday August 2, 2012 8:10 am|
Europe is tanking today after the European Central Bank’s Mario Draghi quite literally failed to put his money where his mouth is. Last week, Europe cheered when Draghi said in a press conference that the ECB would do “whatever it takes” to save the euro. He also said that the high bond yields in Spain and Italy interfered with his ability to conduct monetary policy.
|By: David Dayen Tuesday July 31, 2012 9:40 am|
Mario Draghi can only say “we’ll do whatever it takes to save the euro” for so long before he has to, you know, do whatever it takes. But Draghi can only go so far without the support of the Germans, and that support looks tenuous at best.