Skip to comments.Venetian cunning of Draghi-Monti masterplan may save euro for now
Posted on 08/05/2012 5:22:27 PM PDT by bruinbirdman
So we enter the treacherous market month of August with Europe in limbo. The actors wait upon each other. World finance held hostage to a fiendishly complicated game of diplomatic chess.
Italy's premier Mario Monti - working in tandem with ECB President Mario Draghi - agree that markets are
unfairly punishing the victim states.
The European Central bank will not move until Spain requests a full sovereign rescue from the EU bail-out fund (EFSF), and cedes yet more ground to EU commissars.
Spain in turn will not move until the ECB lays out the exact terms of any deal, and until the Teutonic bloc signals whether it intends to crush Spain into abject humiliation - a la Grecque - or seek a fraternal outcome.
Madrid has no bond auctions in August. It can in theory hold out until October, if it is willing to let contagion spread to the last redoubts of corporate solvency.
Global markets were surprised by Mario Draghi's refusal to deliver instant ECB salvation last week. They should not have been.
We have known for weeks that the `Draghi Plan' for mass purchases of Spanish and Italian bonds requires the political trigger of an EFSF bail-out, with supplicant states signing a "Memorandum". The EFSF is the enforcer. The ECB is the cash cow. One unlocks the other.
Hardly ideal, you might say, but how else could Mr Draghi ensure the acquiescence of Berlin, or win over swing-voters on the ECB's Governing Council. Tactically, he has pulled off a master-stroke.
The Bundesbank's Jens Weidmann is isolated. The Dutch and Finnish governors backed the Draghi plan. So did Germany's member on the ECB's executive board, Jörg Asmussen. The Kanzleramt has lost patience with the ideological preening of the Bundesbank.
Mr Draghi has
(Excerpt) Read more at telegraph.co.uk ...
Apparently the Asians are not too optimistic. They are accumulating gold.
Whenever the pundits expect the worst, because the market is in a treacherous period (it is), the market does just the opposite.
It probably will have a good August.
Victims? Holy bovine excretion, Batman.
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