Emergency Central Bank Intervention Coming?
It hardly matters as only buys time at best.
by Stephen Lendman
Greece is a corpse. It's waiting for its obituary to be written. Spain is on life support. Portugal and Ireland are wheezing. Italy is breathing hard. Britannia is sinking. America isn't far behind.
Progressive Radio News Hour regular Jack Rasmus said significant private sector job creation, housing recovery, and state and local government spending increases followed 11 post-war recessions.
In contrast, Obama's first term achieved nothing. "There have been no effective jobs program, housing-foreclosures solution program, or state-local government spending program. That tripartite failure is at the heart of (his) failed economic recovery."
Conditions in Europe are worse. Will they or won't they? At issue is Fed QE III and massive ECB monetary intervention. Rasmus says smart money isn't sure. It can go either way. It can be some but too little to matter. It can be substantial and accomplish nothing.
On August 2, we'll know. Or will we? The ECB's governing council meets. It may act, do nothing, or defer to a later date. ECB authority is limited.
The Fed may move now or post-election. Rasmus ups the odds for intervention then. At the same time, whatever it does leaves deep-seated problems unresolved.
Monetary intervention only buys time. Unresolved problems fester and increase. Paul Craig Roberts calls America's economy and financial system broken. In Europe things are worse.
On July 26, ECB President Mario Draghi said he'll do "whatever it takes" to protect the euro. "Believe me, it will be enough," he added.
Equities and bonds rallied. No matter. Euroskeptics abound. Is it talk? Will he act? Does his mandate limit him? Will Germany agree? Most important is does it matter?
LTRO I and II (Long-Term Recovery Organization) were Draghi's last grand schemes. They let banks borrow at 1%. The idea was to recapitalize them and use funds to buy sovereign bonds.
Breathing room was short-lived. It lasted three months. On July 26, ECB data showed Q II business and household borrowing contracted by 88 billion euros.
UK Telegraph international business editor Ambrose Evans-Pritchard said Mario's "bond bluff electrifie(d) global markets."
His "comments came as Spain claimed backing from France and Germany for activation of the eurozone's rescue fund (EFSF) to buy Spanish bonds, though this would require calling the Bundestag's finance committee back from holiday for a vote."