Economist Magazine Finally Figures Out What the ECB is Up To ( and Proves Krugman Even More Clueless)

Economist writes today:

AT THE European Central Bank's last meeting, Mario Draghi did not announce any plans to scale up purchases of sovereign debt and, indeed, he indicated that previous statements interpreted as a promise to do so were in fact no such thing. He did, on the other hand, announce new measures to boost liquidity across euro-zone banking systems, including a facility through which banks can borrow unlimited amounts from the ECB, very cheaply, for up to three years. It quickly dawned on observers that banks might just use this borrowing to fund purchases of government debt, thereby addressing the crunch in sovereign debt markets. And I see that some writers are now arguing that this step actually amounts to the critical turning point in the crisis.

I wrote, a week ago, on December 9, in the EPJ Daily Alert:

 This looks to me like the bazooka being put in place and that it is going to be used. All that junk paper the EZ banks have on their books will be allowed to be traded in for newly printed euros....the ECB appears willing to back up EZ debt via the back door, as it has agreed to accept more types of debt securities from banks in discount operations. This could prove to be a very profitable arbitrage for banks, as they could buy high yielding paper off the market and have it financed by the ECB at low rates.

Oh, by the way, notice the date: December 9, I wrote this on November 30 about Krugman cluelessness:

The world's central banks have just announced a program to print huge amounts of money via dollar swaps and Paul Krugman doesn't understand why it is a big deal....
 He writes:

I am, I have to say, somewhat mystified...It looks like a non-event to me. 

It usually takes months to prove Krugman clueless. This time it will take just a little more than a week. The swap announcement is the first step in a major money printing plan. Or do you think Geithner and the President had European Council President Herman Van Rompuy over to the White House on Monday, along with European Commission President José Manuel Barroso, and High Representative Catherine Ashton, because they are great conversationalists over tea?

December 9 is the day the European Central Bank will announce its new money printing plan. You heard it here first. Krugman is clueless or mystified, whatever. I guess in this context it's pretty much the same thing.