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George is currently a Managing Director at Lion Fund. He has written for Seeking Alpha, The Motley Fool,, Psychology Today and his works have been featured on Seeking Alpha's Wall Street Breakfast, MSN Money, Yahoo! Finance, AOL DailyFinance, CNNMoney, CNBC, MarketWatch, TheStreet,... More
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  • The Euro Bazooka 0 comments
    Sep 10, 2012 5:38 PM | about stocks: EUO, EPV, GUR, UPV, FXE

    Last Thursday the European Central Bank President Mario Draghi announced the critical development that the ECB would buy the bonds of struggling Eurozone governments without limit in an action termed Outright Monetary Transactions (OMT). Other specifications in this development include the ECB's renunciation of seniority to creditors and the "sterilization" of the bond buying by taking an equivalent amount of money out of the markets elsewhere. Markets worldwide soared on the news.

    Despite the investor euphoria, it should be noted that Germany still has to be fully convinced to join the bandwagon. Germany is the most important piece to the allowance of the OMT with a 27% voting weight and the only dissenting vote on the OMT was from the leader of the Bundesbank, Jens Weidmann. Moreover, the German constitutional court is issuing a preliminary ruling on Wednesday on the European Stability Mechanism (the successor to the European Financial Stability Facility) that could potentially block its activation and detrimentally impact the OMT.

    However, despite constant German opposition, the degree of German opposition seems to have shifted significantly. For one, German Chancellor Angela Merkel and Germany's board member Jorg Asmussen voted for the OMT, which represents a surprising development that The Telegraph attributes to, in part, "vastly superior global power."

    Themes: Europe, Economy Stocks: EUO, EPV, GUR, UPV, FXE
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