03 September, 2012
The Draghi Put
It is in fact an option - no perhaps just a boast - to shore up the weaker Eurozone economies with money created by the European Central Bank.
Mario Draghi is the President of the ECB and today is his 65th birthday.
I am not sure he has much to celebrate, though. First Angela Merkel put her oar in, insisting that countries in receipt of this largesse first apply to one or both of the bailout schemes (the EFSF and the ESM) and conditions will be attached to their rescue. Then last week Jens Weidmann, head of the Bundesbank, threatened to resign if there were limitless credit on offer (it is, of course, the Germans who have to pay).
The ESM has not been fully ratified yet (the German Constitutional Court has not yet spoken) and Spain and Italy, fearful of conditions being applied to them, have not applied for help.
So right now Draghi's promise to do everything in his power to save the euro just looks like whistling in the dark
'I will do such things - what they are, yet I know not: but they shall be the terrors of the earth!'