ECB’s Draghi Hints at Purchases of Sovereign Debt; Is Just Saying So Enough?

By: 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.


ECB Prepares to Reveal Its Decision on Eurozone Rescue

By: 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

Greece No Longer the Problem for Europe; It’s Recession and Capital Flight

By: Friday August 24, 2012 9:43 am

Greek Prime Minister Antonis Samaras begged his minders in the Eurozone for more time to institute austerity policies, asking German Chancellor Angela Merkel for “time to breathe.” That may not be forthcoming. The troika (the EU, IMF and European Central Bank) will write a report in the coming month that will determine whether they continue granting Greece tranches of the bailout agreed to earlier in the year. Germany and France have basically agreed that the reform targets must be met. And it does not look like they will grant an additional two years to Greece to meet those targets. The chances of a Greek exit from the Eurozone have definitely gone up.

ECB Bond-Buying Proposal Confirmed By Second Media Outlet

By: 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.

European Central Bank Floats and then Denies Mass Bond-Buying Scheme

By: 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.

The Lost Decade: Almost All Eurozone Nations Still Below Economic Output of 2008

By: Friday August 17, 2012 6:44 am

The markets have been pleased of late because of a belief that the European debt crisis will resolve itself. The European Central Bank could step in and purchase sovereign bonds, if they can get Germany to sign off. Spain is inching toward a formal request for bailout funds, which is what the ECB wants so they can impose the reforms they have sought. And there’s just a general sense that European leaders will juggle enough balls in the air to keep the euro from collapse.

If only that were the sole problem in Europe.

EuroZone Economy Sinks Towards Recession

By: Tuesday August 14, 2012 9:10 am

The emerging recession continues in the Eurozone, as GDP contracted by 0.2%. The loss was slightly smaller than expected, but that’s something of a double-edged sword. The economy grew in Germany but dropped in more struggling areas like Italy, Portugal, Spain and Greece. This means that one governing authority must apply a unified monetary policy on a widely divergent region.

Draghi’s Pieces Falling into Place for Bond Buying Program

By: 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.

ECB Bond-Purchase Gambit Does Not Have Consensus

By: 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.

ECB’s Mario Draghi Promises “Whatever It Takes” to Save the Euro

By: Saturday July 28, 2012 7:00 pm

European markets have surged over the last 24 hours, basically entirely due to a speech by Mario Draghi, the head of the European Central Bank. He said that his organization would do “whatever it takes” to save the euro, and that was apparently all it took.

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