- This topic has 12 replies, 8 voices, and was last updated 12 years, 1 month ago by
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Might save the Euro, but screwed the economy. EU has grown about 1% since the start of the financial crash. Just outside, Poland has grown 15% – thats how much poorer the EU has become.
If this drags on for a decade, which is expected, Europeans will have seen their economy’s halve in value compared to the rest of the world.
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@shakeel wrote:
Poland has also started from a very low base. Has benefited from Poles working aboroad & remitting funds in addition the German investments.
Yes, thats called having an economy. The UK gets all those sorts of benefits and much more and its still falling.
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@DBMarcos99 wrote:
Apparently Merkel and Hollande are going to meet at 1pm CET to discuss the purchase of Spanish bonds by the ECB
If Merkel agrees, this is big news. I have to admit I was wrong, I thought the Germans would never agree to this and that Spain would have to leave the Euro.
Apparently Merkel has demanded not to be disturbed while on holiday during all of August. It’ll be interesting to see what they come up with in order to achieve that.
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Seeing as the ECB has been quietly purchasing bonds for a long time I can’t see what difference it will make long term. Once they stop buying then the rate creeps up again.
The ECB could, and through the late summer of 2011 did, purchase bonds issued by the weaker states even though it assumes, in doing so, the risk of a deteriorating balance sheet. ECB buying focused primarily on Spanish and Italian debt. Certain techniques can minimize the impact. Purchases of Italian bonds by the central bank, for example, were intended to dampen international speculation and strengthen portfolios in the private sector and also the central bank.
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We’ll see the outcome of this meeting fairly soon
http://news.yahoo.com/hollande-merkel-discuss-crisis-phone-source-104157903–business.html
The French, Italian and Spanish governments are pushing for the decisions made in Brussels to be implemented swiftly in order to speed up help for Italy and Spain, where borrowing costs have soared in recent days.
Separately, the French daily Le Monde reported that euro zone governments and the European Central Bank are preparing to intervene to help settle financial markets.
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The markets have taken Dragi’s remarks of ‘whatever it takes to save the Euro’ as a sign the ECB is ready to purchase sovereign bonds for the first time directly. Why is a mystery.
Previously the ECB has only bought bonds in the secondary bond market to lower yields.
The German Bundesbank is opposed to direct purchase of soverign bonds and believes this action would breach existing treaties.
Quote FT:
While Bundesbank opposition is not fatal to any ECB action – no national central bank has a veto over ECB policy decisions, which are voted upon – in practice German resistance is a problem.It’s more than a problem. Legal challenges will be made by German lawmakers based on treaty obligations and Dragi knows it.
Little will be decided whilst the power brokers go off on holiday. If Spanish yields rise again it will just be tough or Dragi can use up a bit more of his credibility and make further press statements to calm markets.
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Somebody has to pick up the bill for these bond purchases.There is a limit to what the ECB can do without inputs into its balance sheet. Ultimately the German taxpayer may decide enough is enough as do the Dutch Finns Austrians.Equally so its not right that the Spanish should have to put up with unfair speculation when they are playing ball . These yields need to be capped -and it should not be beyond financial engineering to find a way of doing just that. No Pago 7%.
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