Mish's Global Economic Trend Analysis |
No One Happy Except Stock Market; Discord Emerges in Spain, Italy, Germany to ECB Announcement Posted: 08 Sep 2012 06:33 PM PDT Discord Emerges It's not just Germany expressing reservations about the ECB's plan to "Save the Euro". Spain, Italy, and Germany all have concerns about the plan launched last week by ECB president Mario Draghi. Germany does not like the plan because it does too much (please see 54% of Germans Want Constitutional Court to Kill the ESM; Merkel's Disingenuous Reservations) but Italy and Spain are annoyed they may have to bow to the Troika to get bailouts. Please consider After High Note for Euro Plan, Discord Emerges. Greeted with initial fanfare by investors and economic officials, the unlimited bond-buying plan that the European Central Bank president, Mario Draghi, announced Thursday ran into immediate political problems in the crucial countries of Germany, Spain and Italy.ECB's Dirty Work German newspapers blasted the announcement, even typically pro-EU newspapers as per Der Spiegel article 'The ECB Is Doing Governments' Dirty Work' The markets reacted to the announcement with euphoria. On Friday, the German DAX stock market index climbed to over 7,200 points, its highest level in 2012. Yields on Spanish and Italian sovereign bonds dropped, as well.No One Happy Except Stock Market There are some favorable comments in the Der Spiegel but many additional negative ones that I did not excerpt. Curiously, no one seems happy with the deal but the central bankers who hatched the plan and the stock market. Of course the stock market always easy money, until things blow sky high like the 2000 dotcom bubble and the 2005 housing bubble. Addendum: Note to All Facebook Users: If you have not yet voted for your favorite charity (it costs nothing to vote), please do so. Chase is giving away $5 million to charity, and I have a cause that I support. Please click on this this link: Facebook Users, I Have a Favor to Ask, then follow the instructions. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
54% of Germans Want Constitutional Court to Kill the ESM; Merkel's Disingenuous Reservations Posted: 08 Sep 2012 10:03 AM PDT Moment of Recognition It appears a majority of German citizens have finally had enough of chancellor Angela Merkel saying one thing and doing another in regards to bailouts. They have also had enough of Mario Draghi and his policies. According to Der Spiegel a Majority of Germans Want the Constitutional Court to Kill the ESM Poll Results
Merkel's Disingenuous Reservations Another article in Der Spiegel claims Merkel has also expressed reservations on ECB decision. Merkel frequently says one thing and does another. If she has reservations, I suggest the reason is political expediency. Too many Germans are against the ESM for her not to express reservations. Other German politicians are much easier to read. For example... CSU General Secretary Alexander Dobrindt reacted anxiously: "I stand by my warning that a public finance by printing is wrong and extremely dangerous." He could only urge Draghi strongly "not to open the floodgates for comprehensive purchasing programs." Dobrindt warned: "The ECB must be a bank stability and must be no inflation bank." Court Ruling Coming Up On September 12, the German constitution court is expected to rule on the ESM as well as the fiscal treaty chancellor Angela Merkel signed in March. I believe bond purchases by the ECB are in violation of the Maastricht and Lisbon treaties which explicitly ban state funding. Nonetheless, I expect the court to OK the ESM with reservations and warning. One thing that might influence a no vote is Mario Draghi's plan that allows unlimited purchases. Thus approval by the court is not guaranteed by any means. Addendum: Note to All Facebook Users: If you have not yet voted for your favorite charity (it costs nothing to vote), please do so. Chase is giving away $5 million to charity, and I have a cause that I support. Please click on this this link: Facebook Users, I Have a Favor to Ask, then follow the instructions. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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