The Guardian – Josephine Moulds – Eurozone Crisis : Thinkthank Urges ECB To Resume Bond Rescue – 3 September 2012

(Lucas : quit contraire of others reporting on debt-forgiveness this bond buying issue is not. It is just a buying of debt that is financed with debt money from a broke ECB that still is printing the money presses without having any value backing it. Merkel has begged China to buy bonds and therefore a bit of the debt will be  disappearing from the eye. Even so, it  is just not enough  and debt will still grow and the countries keep pumping around debt and adding debt and inflation to it.  Fantasy and fiction are often mistaken for reality. Reality is : the system is broke and  it has to be shut down and demolished.

A new start needs to be made with a new real value backed and non-fiat currency system, with national owned central banks that never again can be privatised or be a company and may not be given the power to go printing money beyond the value that is backing it.  Debt forgiveness in the Euro zone can not be counted for as the debt still exceeds any reasonable payback capacity of the loans, the outstanding debt in total is too big to pay for the debtors as for those bailing out others or lending the system it, it is adding to their  own debt and therefore more  debt all around.  If spain is asking thrice for help and not being able to get her bills paid in shorter and shorter distances  of time and other countries  do also have those problems it says enough. The problem will never be solved as it is now in an automatic irreversible debt spiral that is not being solved by partial debt forgiveness (or buying debt). We see the system having problems to pull a new trick out of the hat as every trick you can think of is already used. The last trick will be pushing for more central powers which will not make the system different just more authoritarian and running by dictate and undemocratic for sure. Other countries and the Brics and NAM countries see that there is more safety and luck in a new value backed and or new currency that will bring stability. They turn away from the  US Dollar and Euro.  I hope we will get an Icelandic financial revolution and see that we can make things right but we need to stop the current system and get all responsible out of it to make place for new.  How long this dragging of the feed of the Euro, Dollar, ECB and FED will go is what is the question. What will give it the final blow? Will they pull out the stop on their own?   Also the growing success of new alternative exchange and regional or local currency systems is  what is a sign things are also not exploding but imploding and being changed from within. We can do also. We have to see. I am though confident all will be manifesting soon as the signs are showing the time of the collapse is near and the new shines already on the horizon.)

José Ángel Gurría of Paris-based OECD says European Central Bank should start unlimited bond-buying of crisis-hit countries

The head of the Organisation for Economic Co-operation and Development has urged the European Central Bank to start buying bonds of crisis-hit countries again, to help bring down their borrowing costs.

José Ángel Gurría, secretary general of the Paris thinktank, said: “The ECB should start unlimited bond buying, the sooner the better. It has to be a credible signal … to say: we have members of the family that are doing the right thing, we will not let you push them around.”

The ECB will meet on Thursday to discuss, among other things, the potential to resume the bond-buying programme.

The need to bring down Spain’s borrowing costs is becoming increasingly urgent. The heavily indebted country is due to pay back €15bn next month, but cannot borrow at affordable rates to refinance the debt. The yield on Spanish 10-year bonds last week got perilously close to 7%, a level considered unsustainable in the long term. By contrast, the yield on German 10-year debt is 1.3%.

The Spanish prime minister, Mariano Rajoy, said at the weekend a monetary union could not function with such a wide gap between the borrowing costs of member states. He too urged the ECB to restart the bond-buying programme but continued to resist calls to seek more financial help.

Spain, which has already implemented severe austerity measures in return for up to €100bn in aid for its banking sector, is reluctant to ask for more as it fears further austerity could push the country into a recessionary spiral. Rajoy said he would await decisions by the ECB and then consider “what is good for Spain and the euro“, suggesting he will not make any request for further aid before the meeting on Thursday.

He said Spain had already done more than other countries in the eurozone to address its budget problems. “We have raised taxes, reformed our labour market, introduced a fiscal pact into our constitution and passed a law for budget stability.”

The ECB president, Mario Draghi, has been thrashing out a rescue package for Spain this weekend, arguing for purchases of the bonds of struggling member states. Germany opposes such a move, saying it would damage the credibility of the bank and the currency.

Reports suggest Jens Weidmann, the Bundesbank president and Germany’s member of the ECB’s governing council, repeatedly threatened to resign because of his opposition to a renewed bond-buying programme.

“For me such a policy comes close to financing states with the printing press,” he said in German newspaper Bild Zeitung. He warned that such a policy “can get [states] hooked like a drug”.

Despite Germany’s economic clout within the eurozone, Weidmann has only one vote in the ECB and economists expect confirmation on Thursday that the ECB will restart the bond-buying programme.

However, it is thought the announcement may not be enough to galvanise the markets. Analysts at Capital Economics wrote in a note: “We expect the [ECB] to disappoint markets by providing only details about how it might buy bonds in future instead of a grand plan for immediate and massive purchases.” Previously the ECB has said it will only buy sovereign bonds at the request of a country, and if certain conditions are agreed.

http://www.guardian.co.uk / link to original article

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