As eurozone leaders have tried but failed miserably to convince markets that they have either the will or the way to solve the region's sovereign debt crisis, a growing number of world leaders and economists are calling on the ECB to step in and fight the raging fire. They argue that as the region lurches from one crisis to another, with Italy its latest focus, the ECB is the region's best chance of drawing a line under this terrible chapter by agreeing to act as lender of last resort to its governments through the large-scale purchase of sovereign bonds. Yet Mr Draghi is strongly opposed to the suggestion. He insists that such a move would compromise the central bank's independence and amount to a bail-out for individual countries which is not the role of the ECB. Instead, he and his fellow policymakers would like to continue to focus on the ECB's remit of targeting below 2pc inflation. But as days and weeks pass without a resolution of the crisis - which is plaguing the region, weighing down on the global economy and threatening to bring down the European Monetary Union - it may now be the only credible option. The problem is not going to go away. Among major European economies, a total of €1.1 trillion of debt will mature in 2012. Question marks over Italy's ability to honour its debts pushed the Italian government's borrowing above 7pc this week, an unsustainable level which forced fellow eurozone countries including Greece and Ireland to be bailed out. So who is going to come to the rescue? 
Access Investments-Building Awareness - European Union-ROMANIA
Sunday, November 13, 2011
As eurozone leaders have tried but failed miserably to convince markets that they have either the will or the way to solve the region's sovereign debt crisis, a growing number of world leaders and economists are calling on the ECB to step in and fight the raging fire. They argue that as the region lurches from one crisis to another, with Italy its latest focus, the ECB is the region's best chance of drawing a line under this terrible chapter by agreeing to act as lender of last resort to its governments through the large-scale purchase of sovereign bonds. Yet Mr Draghi is strongly opposed to the suggestion. He insists that such a move would compromise the central bank's independence and amount to a bail-out for individual countries which is not the role of the ECB. Instead, he and his fellow policymakers would like to continue to focus on the ECB's remit of targeting below 2pc inflation. But as days and weeks pass without a resolution of the crisis - which is plaguing the region, weighing down on the global economy and threatening to bring down the European Monetary Union - it may now be the only credible option. The problem is not going to go away. Among major European economies, a total of €1.1 trillion of debt will mature in 2012. Question marks over Italy's ability to honour its debts pushed the Italian government's borrowing above 7pc this week, an unsustainable level which forced fellow eurozone countries including Greece and Ireland to be bailed out. So who is going to come to the rescue? 
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ECB already seem to be at work printing new money and buying bonds of bankrupt countries. Now they have started, it will be like the sorceror's apprentice, pleasant at first as the crisis will appear to go away, but the underlying problem of states promising too much and taxing too little will keep them coming back for more money, and the brooms will split as other countries will see the easy money and come for some of their own. The ECB will only ever be repaid if they print the money they are owed, and the madness will continue until hyperinflation lays waste to the eurozone.
With UK state debts mounting, will the UK choose to print when the bond markets seize up for UK debt? I suspect they will, and destroy the pound in an inflationary maelstrom. Gold seems look a good idea.
ECB already seem to be at work printing new money and buying bonds of bankrupt countries. Now they have started, it will be like the sorceror's apprentice, pleasant at first as the crisis will appear to go away, but the underlying problem of states promising too much and taxing too little will keep them coming back for more money, and the brooms will split as other countries will see the easy money and come for some of their own. The ECB will only ever be repaid if they print the money they are owed, and the madness will continue until hyperinflation lays waste to the eurozone.
With UK state debts mounting, will the UK choose to print when the bond markets seize up for UK debt? I suspect they will, and destroy the pound in an inflationary maelstrom. Gold seems look a good idea.
The EZB (EaSy-bank) has to act within the law. That goes without saying but needs to be typed down. The interpretation of the law is another matter -- its elasticity if you like.
So far the Euro has born up remarkably well. If the Euro-zone problem is to be resolved from within, only Germany and Holland have the economic performance to act, so they have to agree. On the other hand, Italy is not such a basket case as some have suggested and now that Berlusconi is free from the shackles of high office, he might put his not inconsiderable wealth to work.
Spain is with Ireland the country in the Euro-zone where USA is directly exposed. Politically, USA has to help Spain because they joined USA in their Iraq adventure and suffered a massive terrorist attack as a result.
Finally, triggering those pesky CDS etc will land the bill in the lap of the taxpayers of USA (and UK), not a good thing in an American election year.
A nice conundrum to solve. Merkel and Lagarde seem to have good chemistry. let´s hope they can find the magic path.
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