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Was ECB President Draghi's promise to defend the integrity and future of the euro premature? All we have so far is a bunch of guesses of what the future defense of the euro might be.

In the meantime, the employment numbers coming from Europe are bleak. It was announced today that Italian unemployment went up to 10.8% from 10.6% last month. The unemployment rate for all of Europe remained at a record high of 11.2%. Last week the Spanish employment was reported at 24.6%.

With the European economies contracting, financial chaos spreading, and unemployment rising, maybe the ECB should focus efforts on preserving the euro, yes, but at a lower level. For years the less competitive economies in the southern part of the eurozone have been handicapped with a strong euro. Now with the economy in Europe slipping into a recession, a lower euro might provide more benefits than sending funds to the zombie banks.

Letting the efficiency of a market economy cure some of the problems is probably too slow and mundane for today's central bankers. Besides deliberately weakening the euro might be viewed as inciting a currency war.

Further, central bankers are supposed to be the bankers of last resort, helping the local and regional banks. As we noted, however, the European bankers became the lenders of money to sovereign governments. Now we have bankrupt banks no longer able to finance the continual deficits of the various welfare states.

Going forward in August we have another Greek crises. In an article 23 Crucial Days for Greece, Yanis Varoufakis says:

"On 20th August, the Greek government will have to borrow 3.2 billion from one arm of the Eurozone (from the EFSF) in order to repay another (the ECB). Yet Greece is insolvent. The very idea of an insolvent entity borrowing more from a community, like the eurozone, in order to repay that same community is obscene. All it does is to shift the burden from the Central Bank to the taxpayers of Germany, Holland, Austria and Finland. This is not an act of solidarity with Greece. It is an act of irresponsible kicking-the-can-up-a-steep-hill."

Hopefully we will have an announcement from the ECB on Thursday of this week, providing information on how the myriad or problems are to be solved. It seems unlikely there are any clear solutions.

Today there were some minor U.S. reports which suggests the economy is muddling through. U.S. personal income was up 0.5% though spending was unchanged. The US S&P/CS home Price Index, the US Chicago Purchasing Manager Index and the US Consumer Confidence all came in a little better than expected. On Friday we get the NFP Report.

There is no doubt some euro short covering is taking place, though we noted in last week's COT Report there are now less shorts than before. Once the short covering abates and this week's reports are digested we suspect there will be renewed pressure on the euro.

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Source: Patiently Awaiting Draghi's Plans