ECB Bond-Buying Program a Balancing Act Between Leverage and Rescue

By: Monday August 27, 2012 8:55 am

The Wall Street Journal has more confirmation that the European Central Bank will consider rate targets to keep the spreads on bond yields manageable for its member states. The central bank wants to help bring down government financing costs through targeted purchases of government bonds, while preserving their flexibility to change course when needed and [...]

ECB Bond-Buying Confirmed By Second Media Outlet

By: Tuesday August 21, 2012 6:55 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 [...]

European Economy Sinks into Decline

By: Tuesday August 14, 2012 8:15 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 [...]

Draghi’s Pieces Falling into Place for Bond-Buying Program

By: Monday August 6, 2012 6:55 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. Remember that this is all based on the idea that labor market reforms in the troubled sovereigns, which amounts to “internal devaluation” or widespread suffering borne on the [...]

Europe Rebounds as Draghi’s Comments Re-Assessed

By: Friday August 3, 2012 12:23 pm

A funny thing happened on the way to disaster in Europe. Everyone decided that they misread Mario Draghi’s thin policy statement from yesterday, and that he’s actually really committed to saving Europe, particularly by using the power of the European Central Bank to ensure lower bond rates at the most troubled sovereigns. Basically, everyone keyed [...]

ECB Takes No Policy Action, Europe Tanking

By: Thursday August 2, 2012 7:05 am

Europe is tanking today after the European Central Bank’s Mario Draghi quite literally failed to put his money where his mouth is. Last week, Europe cheered when Draghi said in a press conference that the ECB would do “whatever it takes” to save the euro. He also said that the high bond yields in Spain [...]

EU Summit Yields Surprisingly Tangible Results

By: Friday June 29, 2012 7:01 am

The 2-day EU summit may have produced some actual movement that at least gestures in the direction of better policy. After tough all-night bargaining, European leaders appeared to salvage what had seemed to be a summit teetering toward failure by agreeing early Friday to use the continent’s bailout fund to funnel money directly to struggling [...]

EU Summit Solution Looks Remote

By: Wednesday June 27, 2012 6:56 am

This EU summit scheduled for tomorrow (yes, just add that to the calendar with the Supreme Court ruling and the Holder contempt vote) has all the earmarks of a disaster. First, technocrats released a sovereignty-destroying proposal that would combine all of the worst elements of a fiscal union, not solving the growth imbalance problem while [...]

European Leaders Propose Small Stimulus Package

By: Friday June 22, 2012 12:17 pm

I mentioned earlier that the “Big 4″ leaders – of Germany, France, Italy and Spain – were meeting today in advance of a big EU summit next week. That meeting has adjourned, and the leaders announced they would push for a stimulus package of 130 billion euros. But even the initial reports of this shows [...]

German Economy Slows, Perhaps Spurring Action in Europe

By: Friday June 22, 2012 7:37 am

I’ve got the sense, from looking at how Germany has reacted to the crumbling Eurozone around them, that they were predisposed to not react until it got personal, until the depressed economy started affecting their own people. Germany made great economic strides by using the Eurozone to their benefit over the last 10 years, and [...]

Report: Germany Set to Allow Direct Purchases of Eurozone Debt, to Stabilize Yields

By: Tuesday June 19, 2012 11:47 am

Markets have surged on a report in The Guardian (UK) that Germany will acquiesce to outside pressure and allow the current Eurozone bailout fund, which holds about €750 billion, to purchase bonds from troubled Eurozone countries like Spain and Italy. Germany has long opposed allowing the eurozone’s rescue fund, the European Financial Stability Facility, to [...]

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