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Promises became hope and uncertainty. It doesn't matter what Draghi said. He can't deliver. At best he can delay an eventual day of reckoning. Unaddressed systemic rot draws it closer.
Draghi said "(t)he Governing Council....may undertake outright open market operations of a size adequate to reach its objective. We will consider further non-standard....measures....In the coming weeks, we will design the appropriate modalities for such policy measures."Implementation takes time, he stressed. Markets "only adjust once success becomes clearly visible." Governments must "activate the EFSF/ESM (European Financial Stability Facility/European Stability Mechanism)."
EFSF borrowing authority exists. It's capped well below what's needed. The late Bob Chapman estimated $6 trillion. What's available and likely is a drop in the bucket. Chapman predicted a certain train wreck. Only its timing is unknown.
ESM authority is proposed. It's not in place. It's a permanent bailout fund. Creation depends on Germany's Constitutional Court and parliament. Judges must agree to change German constitutional law.
Doing so requires national referendum approval. Perhaps legal requirements will be twisted to avoid it.
Parliament must then act. Doing so is planned for September. Betting odds suggest surrender. Chancellor Merkel long ago sold out to Brussels.
Draghi wants authority to buy toxic sovereign debt. Doing so reshuffles a sinking ship's deck chairs. ECB's mandate prohibits it. Draghi's back door strategy failed.
He loaned Eurozone banks $1.2 trillion. Hoped for sovereign debt purchases didn't materialize. Plan B calls for Draghi to do what troubled banks won't.
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