"Henry Kissinger once said that while "the illegal we do immediately, the unconstitutional takes a little longer."1 Perhaps this is why it took the European Central Bank (ECB) until this week to begin buying up Italian and Spanish bonds in the euro area secondary bond markets. The ECB’s initial hesitation stemmed from its understandable reluctance to get even further involved in European fiscal policy making. Only the ECB has the firepower to affect financial markets in the euro area, and it was essentially forced to intervene on Monday because of market selling and political paralysis. But the ECB always extracts concessions for its nonconventional rescue operations.
Not until this week were the central bank’s Governing Council’s two criteria met for "nonconventional mandate expanding interventions." The first requirement is that, just as in May 2010, the crisis in euro area financial markets must be acute. Second the ECB must be given a fat and juicy set of policy concessions from the appropriate euro area leaders. Only then is the ECB willing to step in to become the euro area’s conditional lender of last resort..."
at http://www.piie.com/realtime/?p=2316&utm_source=feedburner&utm_medium=%24%7Bfeed%7D&utm_campaign=Feed%3A+%24%7Bupdate%7D+%28%24%7BPIIE+Update%7D%29
Not until this week were the central bank’s Governing Council’s two criteria met for "nonconventional mandate expanding interventions." The first requirement is that, just as in May 2010, the crisis in euro area financial markets must be acute. Second the ECB must be given a fat and juicy set of policy concessions from the appropriate euro area leaders. Only then is the ECB willing to step in to become the euro area’s conditional lender of last resort..."
at http://www.piie.com/realtime/?p=2316&utm_source=feedburner&utm_medium=%24%7Bfeed%7D&utm_campaign=Feed%3A+%24%7Bupdate%7D+%28%24%7BPIIE+Update%7D%29
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