Mario Draghi, president of the European Central Bank (ECB), will do “whatever is necessary” to ensure a solvent euro. Draghi made the comments at an investor conference at the Olympics. Professional investors like John Fox, director of research at Fenimore Asset Management, believe it may mark a turning point in the four-year old crisis.
“When the head of the ECB comes out and says he’s willing to do anything,” Fox is quoted as saying. “That’s code for ‘We are going to agree to resolve this issue.’”
Of course, there may be another reason why Draghi is doing this now but it is nothing that Fox would ever allude to. We’ll get to it toward the end of this article.
In any case, one wonders how much of Draghi’s statement is merely an attempt to ”talk up” the market and how much is grounded in reality. To be sure, he is obviously trying to sound tougher about using an array of monetary weapons at his disposal.
In an article about Draghi’s announcement, the Wall Street Journal writes that Draghi ”has had enough.” Like a previously abashed partner in a bad business partnership, Draghi is going to the show the market who is “boss.” He calls the euro “irreversible,” and claims the “euro zone has the power to defeat market speculation.”
Draghi can make a case for generating price inflation now because the expense of government borrowing is impeding the ECB’s ability to conduct monetary policy and to support private sector transactions. He thus has a mandate to “lower … premiums.”
Of course, by that logic anything in the marketplace that affects government debt adversely is fair game for the ECB. Please note: The German people were sold the EU and the euro as something of benefit … not as a “transfer union.” Draghi may manage to do what he intends, but he is running close to the “red” line
full article at source: http://www.thedailybell.com/4127/ECB-Will-Now-Print-Money-Directly-But-Why
After a brief rally ( poss up to 1.26 .I expect to see the Euro hit new lows perhaps down to 1.10 even lower if Spain and Italy has to get a bailout!