28/07/2012
Following Draghi's intervention, with a promise of "whatever it takes", then backed by the joint statement from Merkel and Hollande to like effect, we now get
Die Welt reporting that the ECB is preparing a large-scale intervention, and has an "inexhaustible source of money".
There are two ways of looking at this. One option is that the "colleagues" are preparing to ditch Greece â or perhaps something even more traumatic â and are therefore talking up the euro big time to hide their intentions from the market.
The other is that they really do have that pretty amazing rabbit ready to be plucked out of a hat, and they are going to astound us all with a brand new, cunning plan in order to mount a last-ditch rescue.
The
Bundesbank, however,
isn't playing ball, opposing any further purchases of government bonds by the ECB, or giving a banking license to the ESM.
Given that Germany has not ratified the ESM treaty, and can't do so until Karlsruhe has handed down its judgement in September, it is difficult to see how the Draghi "plan" can work. And the idea that there is suddenly a massive new credit line that the ECB can tap into seems a little far-fetched.
Predictions in this game though are getting too hard to call. Possibly, the "colleagues" are trying to bluff the markets into supporting the euro. But if that is the game, it is a very dangerous play. Misleading the markets may be easy to do, but they can extract a terrible revenge.
