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More on the ECB: Mario Draghi appears to have won over at least one Bundesbank member as Jorg...
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Monday, August 20, 2012, 9:04 PM ETMore on the ECB: Mario Draghi appears to have won over at least one Bundesbank member as Jorg Asmussen tells a German newspaper high peripheral bond yields reflect exchange rate risk, thus "our monetary policy (is) achieved only incompletely." It's crucial wording, suggesting he's okay with ECB bond purchases as long as they're couched in saving EMU, not financing Spanish and Italian governments. "We are working on (a) new program and will deal with it (at the next policy meeting)."
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Chancellor Merkel said last week that the Draghi Plan is “in line” with German policy so long as the conditions imposed on Spain and Italy are tough enough, but Berlin has been sending mixed messages. Finance Minister Wolfgang Schauble said on Sunday that ECB financing of state deficits was anathema: “If we start doing that, we won’t stop. It’s like when you start trying to solve your problems with drugs.”
On another level, we ought to all question the profiteering via slinging of rumors and inside information by what I like to call the "ECB/Buba Dyad."
Good points. It seems hardly likely that the Bundesbank has reversed their position regardless of what Asmussen is saying to the media. Looks more likely to be more hype and talk to try and talk down sovereign bond yields for Spain and Italy in the short-term.
"The choice of wording is crucial. If it can be shown that the ECB is acting to avert EMU break-up – known as “convertibility risk” – bond purchases would no longer be deemed a bail-out for Italy and Spain."
http://bit.ly/QUERzf
RTTNews) - A Greek exit from the euro area would be manageable, but would be expensive, European Central Bank Executive Board member Joerg Asmussen was quoted as saying on Monday.
In an interview with the Frankfurter Rundschau, Asmussen said the Greek exit would be associated with reductions in growth and higher unemployment. An exit "would not be as orderly as some imagine," he said.
Asmussen noted that the ECB acts within its mandate which primarily aims to ensure price stability over the medium term.
Germany strongly opposes bond purchases. Germany's central bank Bundesbank is not isolated in Europe and "no one should try to create the impression that the Bundesbank or its president is isolated," he said.
Stay in high yield and keep massive puts in place. Losing a couple bucks on way out-of-the-money puts is well worth it for the eventual payoff. I'm happy to lose $$ on huge puts for another 10 years. I have no doubt we won't make it 10 years before our next epic collapse.
that's like the weimar "economists" who blamed the hyperinflation on the exchange rate decline of the mark, not the money printing...