Buying Bonds against the Crisis: How the ECB Plans to Use Its Bazooka

[sysop]

The European Central Bank has come up with a new plan to buy the bonds of debt-ridden countries in a bid to fight the euro crisis. Under the new approach, the ECB would only intervene if governments commit to reforms. But experts criticize the plan as dangerous and undemocratic. <i>By SPIEGEL Staff</i>

http://www.spiegel.de/international/...848417,00.html

[yiannaki]

My compliments for this article.
To my opinion it reconfirms the impossibility to have one financial denominator today in Europe. The different quality of the social and by that economic systems in North and South Europe do prevent that.
We better stop thinking and acting this situation was, is and will not be the problem for the next 25 years / 2 generations.
We better do split the euro in a North and a South currency.
And do give the South countries time to restructure their social and by that their economic system. If they want to !
So please do stop this schizophrenic one-euro-policy.
Of course this will hurt.
Specially the southern countries.
But they should have assessed this risk themselves before implementing the euro.

[HoratioJones]

That a few stone age monetarists at the Bundesbank can prevent the ECB from using normal monetary authority to respond to a serious crisis is what makes it virtually certain that the Euro experiment will result in tremendous and unnecessary economic pain and suffering and, ultimately, in dissolution.

The only hope is that politicians will override this short-sightedness and correct the design flaws of the ECB. The pseudo-Gold standard that the ECB is forced to apply is the same medicine that led to the great depression. It is this regime itself that makes countries vulnerable to default and leads to risk premia that are destabilizing.