Yet another ECB bluff?
With Greece setting a precedent for endless bailouts and with core European countries more unwilling than ever to continue throwing money out of the window, the ex-Goldman head of ECB resorted to yet another attempt to keep sovereign rates low. According to unsourced data the ECB is considering to establish in its future bond purchases interest rate levels for each country, which would enable the central bank to buy sovereign debt of the crisis countries, whenever interest rate levels exceed a certain spread to German Bund. Whether this will be the case, we will find out at the next conference of the governing council in early September. In the meantime we can only say that this would require an infinite balance sheet (something that the ECB does not have), especially without German support.