Draghi gets it right

[admin]

SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE
GSPG10YR:IND 6.03000 0.37900 5.91%

Yields falling nearly 6% and this is the ten year bonds they're not going to buy (they will buy up to 3 year bonds)..

Pretty good so far. It's not how things are supposed to work, but really something had to be done.

[admin]

Draghi Gets It Right, But Is This A Game Changer?

September 6, 2012

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)

Well, the news is in: The ECB president has finally revealed detalis of a plan (called Outright Monetary Transactions, or OMTs) to deal with the outflow of capital from the likes of Spain. Here are the main points:

1. There will be unlimited ECB bond buying for bonds up until three years maturity
2. This buying is conditional, countries have to sign up to the EFSF/ESM rescue funds
3. The buying will be completely "sterilized" -- that is, the monetary consequences will be offset by selling other assets
4. The ECB will give up priority creditor status for these purchases
5. The EFSF/ESM might even be called upon to buy debt in primary markets (that is, direct lending to governments, which the ECB can't do) [Read on here]

[Petrovale]

http://www.guardian.co.uk/business/2012/...-plan-euro

[admin]

["The Germans threw their toys out of the pram after Draghi's announcement"]

Haha, that's funny, sort off. What Draghi did is simply amazing, he's much more effective than Trichet. And as I wrote in my own article, it's a necessary but by no means a sufficient step, there are still a few negative feedback loops working, but this is more than I hoped for.