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ECB risks its reputation and a German backlash over mass bond purchases

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May 13, 2010 – Comments (2)

This was a pretty obvious logical outcome to this massive change in European QE policy

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ECB risks its reputation and a German backlash over mass bond purchases
The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders.
By Ambrose Evans-Pritchard
Published: 5:30AM BST 11 May 2010

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7707775/ECB-risks-its-reputation-and-a-German-backlash-over-mass-bond-purchases.html

[excerpt]

Jean-Claude Trichet, the ECB's president, denied there had been any political interference. "We are fiercely and totally independent," he said.

It is clear, however, that the two German members of the ECB's council voted against the move, a revelation that may cause a catastrophic political backlash in Germany.

Axel Weber, ultra-hawkish head of the Bundesbank, told Boersen-Zeitung that the emergency move over the weekend had been a mistake. "The purchase of government bonds poses significant stability risks and that's why I'm critical of this part of the ECB's council's decision, even in this extraordinary situation," he said. The rebuke is devastating. The ECB draws it authority from the legacy and aura of the Bundesbank.

The European Commission made matters worse by announcing the decision in the small hours of Monday morning before the ECB had spoken, fuelling suspicions that monetary policy is being dictated by the political authorities. [My comment: No sh**] French President Nicolas Sarkozy further enraged Berlin by claiming that 95pc of the $1 trillion "shock and awe" rescue package was based on French proposals.

2 Comments – Post Your Own

#1) On May 13, 2010 at 12:28 PM, FleaBagger (29.21) wrote:

I'm glad I bought gold and silver back when I could afford it. (I'm not saying it's too expensive now, but I'm jobless right now.)

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#2) On May 13, 2010 at 12:33 PM, binve (< 20) wrote:

FleaBagger ,

>>I'm glad I bought gold and silver back when I could afford it.

Me too :)

>>I'm not saying it's too expensive now, but I'm jobless right now.)

Dude, sorry to hear that!. I hope you find one soon!..

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