Friday, August 3, 2012

HOT: Merkel’s Coalition Members Signal Acceptance Of ECB Bond-Buying

Members of German Chancellor Angela Merkel’s coalition parties signaled they won’t stand in the way of European Central Bank chief Mario Draghi’s plan to buy government bonds, Bloomberg is reporting..

The envisaged move to purchase troubled euro states’ government bonds is “a wise middle way” to solve the region’s debt crisis, Elmar Brok, a European Parliament lawmaker and executive-committee member of Merkel’s Christian Democratic Union party, told Deutschlandfunk radio today.

Norbert Barthle, CDU budget spokesman, said that German lawmakers will have veto rights over bond purchases by the euro- area’s rescue funds, which would operate in tandem with the ECB under Draghi’s proposal. The temporary fund “was created for a purpose and bond-buying is in the manual,” Barthle said yesterday by phone.

The question now becomes what is meant by "in tandem with the ECB"? Does this mean the ECB starts printing euros? The rescue funds themselves that are currently set up don't have enough funds in them to do the job. Stay tuned, the great euro money printing may be about to begin.


  1. Euro flight perhaps propping up the dollar some more? Hmmm...I see gold/silver going up as I type this anyway...

  2. "Stay tuned, the great euro money printing may be about to begin."

    Robert, would you expect that significant Eurozone QE would have the same effect on the price of coal, iron ore that the US Fed's QE had or a less marked effect given the concerns over a China slowdown that were only seen by the Austrians in 2010-11 but are now mainstream?

    I ask this because working in the Australian coal industry which is being hit by decreased prices, two new taxes (MRRT & carbon tax) and high labour costs I am seeing increasingly common indications of major cutbacks and potential for some huge project expenditure to be canned, which of course would probably send Australia into a recession unless coal & iron ore priced come back to higher levels.