Posted on 05/11/2010 11:13:42 AM PDT by george76
The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders.
the two German members of the ECB's council voted against the move, a revelation that may cause a catastrophic political backlash in Germany.
Axel Weber, ultra-hawkish head of the Bundesbank, told Boersen-Zeitung that the emergency move over the weekend had been a mistake. "The purchase of government bonds poses significant stability risks and that's why I'm critical of this part of the ECB's council's decision, even in this extraordinary situation," he said. The rebuke is devastating. The ECB draws it authority from the legacy and aura of the Bundesbank.
The European Commission made matters worse by announcing the decision in the small hours of Monday morning before the ECB had spoken, fuelling suspicions that monetary policy is being dictated by the political authorities. French President Nicolas Sarkozy further enraged Berlin by claiming that 95pc of the $1 trillion "shock and awe" rescue package was based on French proposals.
"Germans are watching this in horror," said Hans Redecker, currency chief at BNP Paribas. "If this ends up in full-blown quantitative easing, people are going to be up in arms."
As recently as last Thursday Mr Trichet said the governing council had not even discussed buying bonds. Julian Callow, of Barclays Capital, described the volte-face as incredible. "The ECB has ripped up its exit strategy. They have always prided themselves on transparency and consistency, and now they have done this abrupt U-turn."
(Excerpt) Read more at telegraph.co.uk ...
Give Me Back My Deutschemarks!
Merely the overture for the comedy to come.
At current exchange rates that is roughly $275US. Given the US share of IMF financing US taxpayers are on the hook for around $50 Billion.
So much for the EU’s “no bail-out” law.
Next, the eurozone will create a Special Purpose Vehicle able to marshal a further €440bn...off the official books.
A delay in the inevitable.
Yup.
Is it just me, or is this whole thing starting to give off a whiff of fish and wet wool like Iceland... just in a slow-mo sort of way?
“ultra-hawkish”
In the context of unbiased reporting, what is that supposed to mean?
The liberal reporter wants more bailouts...for everyone.
The comments on the Telegraph are worth a read.
Bush: “If b****** was currency, Joe Biden would be a billionaire.” He was spot on about Joe Biden, and maybe about the nature of fiat currency as well.
If the ECB now conducts QE in the hundreds of billions of euros, that money will turn out to be worth no more than the hot air that comes from the mouth of Joe Biden (except maybe to some very large banks).
ht Psittakos
They’re just throwing money away at this point.
Everyone knows that those bonds are worth maybe 50% of their purchase price.
Germans who wish to use firearms should join the SS or the SA - ordinary citizens don't need guns, as their having guns doesn't serve the State. Heinrich Himmler
In other words, Germans may not like it, but they won't do anything about it because they can't.
Warm up the panzers!
Germans may not like it, but they won’t do anything about it because they can’t.
They don’t need to riot. They can vote and some politicians who smell the opportunity can gum up the works. Without Germany behind it any Europe wide plan will fail. Unless of course the US steps in to fill their shoes.
Not just you by a long chalk, laddie!
Article 125 of the Maastricht treaty now enjoys the very same status as the Constitution’s 10th Amendment.
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