Friday, 27 July 2012

Mr Draghi, are you wearing any clothes?

Markets have recovered off the back of ECB President Mario Draghi saying he will do everything to defend the Euro.

The thing is:

1) The ECB can't do much more without further agreement from Germany
2) Germany is on holiday
3) The problems in Spain and Greece can only really be fixed by a massive devaluation via Quantitative Easing - Germany will not agree to this.

So..what exactly is Mr Draghi going to do - what is his bazooka in the modern finance parlance? It is not QE or use of the ESM monies to buy bonds because he is not allowed to do this.

perhaps it is more Bond buying, this in the medium term is nuts. The ECB is going to own all this peripheral debt when the balloon goes up and be seriously bust as a consequence. Who can bail out the ECB when it has already called on all the funds of the Eurozone?

I think this statement yesterday, as much as it rallied the markets, sounds like the last throw of the dice to buy some time over the summer. I wrote earlier this week that August will be critical, its still looking that way.

47 comments:

Barnacle Bill said...

Don't worry Cast Iron & Boy George have a cunning plan to save Draghi's and the ECB's arses.

Get the BoE to lend the ECB all our gold.

Gordon Brown said...

I already sold that useless gold and bought euros with it.

John Parker-Starney said...

Even if you tried every monetary bazooka possible it won't fix that much, you need to accompany this with deep structural reforms. And that ain't gonna happen.

Draghi is having to shout loud because he's got nothing to say.

Blue Eyes said...

Agree with JPS. Draghi's comments got coverage because the markets and media need something for the narrative/feeding frenzy.

He said nothing new. The ECB has no power now that it didn't have before. It can't do what is needed to paper over the cracks.

That the "markets" went nuts for his comments shows how totally shallow they are and/or how desperate people are to bid stuff up quickly and then presumably try to get out of dodge.

hatfield girl said...

German vetoes on what can be done by the ECB are much weaker than they like to pretend.

The ESM can become a "credit institution" if Draghi chooses. Yes Germany rejects such an idea, with reference to both ESM and EFSF. But it turns out that this is a matter of ECB policy, not subject to a German veto: the ESCB [European System of Central Banks] and ECB Statutes, Art. 18 on Open Market and Credit Operations, make this clear.

Also the ECB has off-balance-sheet resources of the order of at least €3.5 trillion being the estimated present value of its seigniorage.

And the ECB could buy government bonds in the same proportions as countries hold shares in the ECB, buy bonds of all countries that is, and nobody - including the Germans - would have any reason to complain, nor Treaty change be required. This was all written up in the Corriere della Sera by Federico Fubini on 24 July.

So there's leverage, QE,and vast funds available to Draghi as and when he chooses to use them. very powerful chap, Draghi.

Steven_L said...

I kind agree with HG (although admittedly she seems to have kept up with this euro thing more than I).

Even France are onside with letting the numbers on the banknotes get bigger - and the value of German deposits get smaller - now.

Only trade unions are so weak that any price inflation will not feed into wage inflation.

So it's 'austerity' (or reality?) all round huh?

James Higham said...

I wrote earlier this week that August will be critical, its still looking that way.

I wrote that after those five U.S. banks defaulted in January. It always seemed that it would be post-Olympics, post-summer.

Which one will go first?

Steven_L said...

Or we could always gang together in the 'developed' world and bom....

No I won't say it.

Electro-Kevin said...

Steven L - If by 'developed' world you mean the USA too then I don't think they intend to pay what they owe meekly.

I did post this on my blog on Obama's inauguration.

Their carriers are on exercise in the South China Sea at this very moment.

Budgie said...

It is not so much whether the Germans (who they?) will put up with backstopping the euro, but whether countries with 25% unemployment can survive for long enough.

Actually I believe Merkel is pulling the wool over the eyes of ordinary Germans, so Germany will probably still end up being the main financier of last resort.

HG makes a valuable point about the powers of the ECB. But there are ways round even the ostensible rules for the powerful in the EU, due to the nature of the EU - the rules are what they say they are.

rs2sale said...
This comment has been removed by a blog administrator.
CityUnslicker said...

August is this week. I don;t think the politico's get how bad this is..or if they do, they are spending time squirelling away their own assets.

So many, many people are telling me that the rich are doing scroeched earth with their money it is starting to worry me that the consiprasists are right...

loren Jett said...

Hello,I love reading through your blog, I wanted to leave a little comment to support you and wish you a good continuation. Wishing you the best of luck for all your blogging efforts. 
http://www.freesemiautopistol.com |

Philip Shaun said...

I'm now not sure the place you are getting your information, but good topic. I must spend a while finding out more or understanding more. Thank you for fantastic information I used to be searching for this info for my mission.
pandoraschmuckshop.com |

Jenni John said...

You may post on the professional credentials for the blog owner. You could express it's outstanding. Your blog experience can springboard your click through.
squierknappdunn.org |

sohan ku said...

Packers and Movers Gurgaon
Packers and Movers Delhi
Packers and Movers Ghaziabad
Packers and Movers Faridabad
Packers and Movers Noida

sohan ku said...

Packers and Movers Mumbai
Packers and Movers Pune
Packers and Movers Chennai
Packers and Movers Hyderabad
Packers and Movers Bangalore

Vietnam Visa Online said...

Great post. Thank you for sharing.

amine lahragui said...

I appreciate you and hopping for some more informative posts. happy new year 2016 new year 2016 happy new year 2016 images feliz año nuevo 2016 imagenes de año nuevo 2016 feliz año 2016 happy new year images 2016 new year 2016 images new year images 2016 bonne année 2016

asds said...

Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
Inspirational Love Quotes
christmas Quotes
christmas messages
CHristmas Wishes

explorequotes.com said...

Biddn

Explore Quotes

Adult Jokes

Quotes About Life

Inspirational Quotes

Friendship Quotes

Love Quotes

Funny Jokes

Birthday Wishes

Poems About Love

Happy New Year Quotes

Merry Christmas Quotes

Happy Valentines Day

Life Quotes

Inspirational Quotes

Friendship Quotes

Funny Quotes

Love Quotes

Anonymous said...

happyvalentinesdaypicture.com
www.happyvalentinesdaypicture.com
happy valentines day pictures

valentine picture
valentines picture
valentine day picture
valentines day picture
picture of valentines day
valentine day picture message
picture of valentine heart
happy valentine day picture

Subramanyam Suziki said...


mother's day poems
happy mothers day wallpapers
happy mothers day photos

father's Day 2016
Happy Fathers Day 2016
Fathers day messages
Fathers day poems
Happy Fathers Day Quotes
Happy Fathers Day wishes
Happy Fathers Day Poems
happy mothers day
mothers day quotes 2016
happy mothers day quotes 2016
funny mothers day quotes

funny mothers day sayings
advance happy mothers day
belated mothers day

Anonymous said...

happy holi 2016
happy holi
happy holi wishes
happy holi sms
happy holi quotes
happy holi messages
advance happy fathers day
fathers day cover photos

ssc results 2016
10th results 2016

10th results
sscresults-2016.com

asds said...

easter eggs Pictures
happy easter day quotes
cute easter quotes
happy easter day 2016

Karan Arora said...

Thanks for providing such a great info, you can see Funny Easter Day SMS plz like and share this post. Thanks Regards

Karan Arora said...

Happy Holi Shayari
Happy Holi Shayari In Hindi
Happy Holi Shayari In English
Happy Holi Shayari For Facebook

Karan Arora said...

Earth Day
Earth Day 2016
Happy Earth Day

Karan Arora said...

Mothers Day 2016 Cards
Mothers Day 2016 Images
Mothers Day 2016 Wishes

Karan Arora said...

Mother’s Day Parade
Mother’s Day 2016 Parade
Happy Mother’s Day Parade

fathers day quotes said...

good one
fathers day cards

Gond Go said...

Happy Memorial Day Wallpapers parade wallpapers Soldiers wallpapers
Happy Memorial Day Images parade soldiers images
Happy Memorial Day 2016 thank you Images
Happy Memorial Day 2016 thank you wallpapers us army
Happy Memorial Day wallpapers parade soldiers thank you wallpapers images
Happy Memorial Day 2016 Messages Quotes
Happy Memorial Day 2016

ruhi singh said...

happy ramadan 2016
ramadan time table 2016
ramadan message 2016
ramadan SMS 2016
ramadan Images 2016
ramadan Quotes 2016
ramadan Greetings 2016
ramadan Mubarak Whatsapp SMS 2016
ramadan Dua 2016
ramadan wishes 2016

Father's Day 2016
Fathers Day sms 2016
Fathers Day cards 2016
Fathers Day images 2016
Fathers Day poems 2016
Fathers Day quotes 2016
Fathers Day facebook whatsapp sms 2016
Fathers Day gift ideas 2016

Father's Day 2016
Father's Day wishes 2016

ruhi singh said...

happy memorial day 2016
happy memorial day message 2016
happy memorial day wishes 2016
happy memorial day images 2016
happy memorial day sms wishes 2016
happy memorial day sms 2016
happy memorial day sms wishes 2016
happy memorial day quotes 2016
happy memorial day greetings 2016
happy memorial day speech 2016
memorial day Quotes 2016
memorial day Poems 2016
memorial day 2016
memorial day quotes 2016
memorial day images 2016
memorial day sms 2016
memorial day weekend activity 2016
memorial day Parade 2016
memorial day Quotes 2016
memorial day FB Whatsapp Status 2016
memorial day FB Wishes 2016
memorial day poems 2016

WKO9iK0ok said...

This Sunday (downstairs in Jerusalem Room) at 9:30 AM we gather together for a presentation / discussion based on Christian themes found in the C.S.

Daily Trending Guide Lewis classic, "The Lion, the Witch, and the Wardrobe." This gathering will continue through November 24. Anyone from high school students to senior citizens are welcome to attend. Join us and be enriched in faith.

wcinsurance said...


Tennis elbow, inflammation of the elbow joint,Old School New Body review is usually caused by overstrain of the muscles in the wrist and fingers.

old school new body f4x reviews It is very painful and limits greatly the use of the hand as the pain
Steve & Becky Old School New Body review
radiates from the elbow to the outer side of the forearm.

Gond Go said...


Memorial Day 2016 Pictures
Memorial Day Pictures 2016
Memorial Day Prayers Messages
Memorial Day 2016 Prayers Quotes
Best Memorial Day Famous Quotes
Memorial Day quotes Sayings 2016
Memorial Day Images 2016
Memorial Day Wallpapers 2016
Memorial Day 2016 Fallen Soldiers Messages
Memorial Day Quotes Fallen Soldiers
Memorial Day Church best quotes 2016 Prayers
Quotes for Memorial Day 2016
Memorial Day wishes to remember soldiers
Memorial Day Sayings blessings quotes wishes

Anonymous said...

we can give a special feel to that person of our life who made us to feel each and every moment special and loving. Happy Fathers Day Images God created his another form on this planet known as Father just like God

Gond Go said...


Happy Fathers Day HD Wallpapers 2016
Wallpapers for Fathers Day HD 2016
Happy Fathers Day 2016 Images
Fathers Day Images 2016
Images for Fathers Day 2016
Pictures for Fathers Day 2016
Happy Fathers Day Pics 2016
Fathers Day HD Photos 2016
HD Photos for Fathers Day 2016
Fathers Day 2016 HD Pictures

Komal Pari said...

Get the latest information about RRB Result
and RRBResult2016 at our site.



jntu fast updates said...

JNTUK 4-2 R10 results 2016
jntuk 4-1 R10 results 2016
jntuk 3-1 R13 R10 results 2016
jntuk 2-2 R13 R10 results 2016
jntuk 2-1 R13 R10 results 2016
jntuk 1-2 R13 R10 results 2016
jntuk 3-2 R13 r10 results 2016
jntuk 1-1 r13 r10 results 2016
JNTUk fast updates
JNTUk results
JNTUK 4-2 R10 results 2016
jntuk 4-1 R10 results 2016
jntuk 3-1 R13 R10 results 2016
jntuk 2-2 R13 R10 results 2016
jntuk 2-1 R13 R10 results 2016
jntuk 1-2 R13 R10 results 2016
jntuk 3-2 R13 r10 results 2016
jntuk 1-1 r13 r10 results 2016
JNTUk fast updates
JNTUk results

http://jntuinfo.in

Friendship said...

happy friendship day images, quotes, wallpapers, wishes, greetings everything is available here

Happy Friendship Day Quotes
Happy Friendship Day Messages
Happy Friendship Day wishes
Happy Friendship Day greetings
Happy Friendship Day images
Happy Friendship Day

Samantha Chaganti said...


Best Beauty Tips
Hair Care
Skin Care
Dandruff
Dry Hair
Weight Loss
Weight Gain


All the Latest News And Downloads Of Music
Bollywood
Tollywood
Latest Videos
Latest Ringtones
Kabali
Babu Bangaram
Janatha Garage
Jr Ntr
Jantha Garage Stills

Rahul said...

Useful quotes and messages thanks for sharing.
nice looking site and great work.

Happy Friendship Day Quotes
new year photos
Best Christmas Quotes
good morning love quotes
Birthday messages
teachers day quotes
dominican usa

Rio de Janeiro 2016 Olympics said...

Good Info

olympics closing ceremony schedule nbc

fast said...

Merry Christmas Images HD Wallpapers Merry Christmas Quotes Messages Sayings 2016 Merry Christmas greeting cards printable cards Merry Christmas status for whatsapp dp Merry Christmas status for Facebook dp
Happy New Year 2017 Images HD Wallpapers Download Happy New Year 2017 Wishes Messages Quotes for friends Happy New Year 2017 Greeting Cards GIF Animated cards Whatsapp Status for Happy New Year 2017 whatsapp dp profile pic Facebook Status for Happy New Year 2017 FB dp profile pic

fast said...

Merry X-mas Images HD Wallpapers Christmas Merry Christmas Quotes Messages Xmas messages 2016 Xmas greeting cards printable cards for Merry Christmas Merry Christmas whatsapp status dp xmas profile pic Merry Christmas Facebook status dp xmas profile pic
New Year 2017 HD Wallpapers Images Download Happy New Year 2017 Messages Quotes wishes for facebook whatsapp New Year 2017 Animated Greeting Cards GIF printable pictures Happy New Year 2017 Whatsapp Status dp profile pic Happy New Year 2017 Facebook Status FB dp profile pic