E.C.B. Considering More Euro Support
The president of the European Central Bank is indicating more help for the european economy if and only if the political leaders make tough decisions preventing a repeat of the present crisis. Mario Draghi is calling on the nations to agree to a "new fiscal compact," that would bring back confidence to the euro. Most analysts seem to agree only the E.C.B., the equivalent of the U.S. Federal Reserve, can save Europe from financial collapse. The E.C.B however refuses to print unlimited amounts of euros to stimulate the economy as the Fed does here by printing dollars. Draghi, in his speech before the European Parliament in Brussels, wants to first see the member nations demonstrate a seriousness, accepting a series of tough fiscal rules. The E.C.B. governing council he heads, has been stoic in refusing a rush to a massive bond buying program, claiming that's against the bank's mandate and would only bring temporary relief. The E.C.B. wants real change and would like to see that intent with specifics from the nations at the December 9th summit meeting. Draghi painted a gloomy picture for Europe if real reform is not taken immediately, noting that "Downside risks to the economic outlook have increased with the banks having trouble raising funds, in "very adverse effects on financing and confidence." Manufacturing is slowing and European unemployment is raising, now higher than that in the U.S. However, yesterday's coordinated action by the world's central banks, increasing liquidity, is still having some positive effect for a second day. The Italian 3-year bond traded at a record 7.89, Tuesday, but is now down below 7% today.