Yes, indeed, it is a little-acknowledged feat of miraculous life-saving power that Europe has not gone to war with itself — other than that whole Yugoslavia thing — since World War II. It’s as clear a demonstration as anything that people can choose to stop fighting. It’s a testament to the pre-war peace efforts that criminalized war, the post-war prosecutions of the brand new crime of making war, the reconstruction of the Marshall Plan, and … and something else a little less noble, and much less Nobel-worthy.

IMF managing director Christine Lagarde has been in the “stop the austerity” camp for a little while now, but this was perhaps her most explicit statement yet on the policy that’s gradually killing off Europe’s economy.

The Greek government submitted a draft budget for next year that would only further increase the pain and suffering directed at the population, despite depression conditions. But the European leaders determining whether the fresh austerity plan is good enough to meet their conditions want even more pain, in the form of deeper wage cuts.

We have a little schizophrenia happening in Germany. On the one hand, they lead Europe in demanding that Spain ask for their bailout already. Michael Meister, a top aide to Angela Merkel and her Christian Democratic Union party, said that Spanish Prime Minister Mariano Rajoy “must spell out what the situation is,” and he warned that any bailout will come with strict conditions, or else the German parliament would reject it. Meister warned of a domino effect, with other troubled countries asking for bailouts without conditionality if Spain gets one.

At the same time, however, Germany wants to slow down the rush to bail out countries like Spain, for domestic political reasons.

A variety of links to articles/interviews/speeches/videos on current issues that may be of interest.

Well thank goodness “austerity” continues to work it’s magic.

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.

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.

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.

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.