Greek riots - ECB paralysis rattles markets as debt costs hit new highs
Posted on 05/06/2010 8:51:54 PM PDT by bruinbirdman
Debt costs surged to fresh highs across the eurozone periphery after the European Central Bank ruled out using its "nuclear option" to stabilise the bond markets, with worrying signs of contagion to Italy
Jean-Claude Trichet, the ECB's president, said the bank's governing council had not even talked about a possible purchase of eurozone government debt at a meeting in Lisbon, despite pleas from economists that this may be the only way to prevent the crisis spiralling out of control.
Greek riots - ECB paralysis rattles markets as debt costs hit new highs
"We did not discuss the matter. I have nothing more to say on it," he said. He stressed that the ECB is "inflexibly attached to price stability", even though core inflation is near record lows at just 0.9pc.
"Governor Trichet came very close to saying that the current mess is not the ECB's problem," said Lars Rasmussen from Danske Banke.
The ECB's paralysis in the face of severe credit stress rattled credit, equity, and currency markets across Europe. The euro crumbled to a 14-month low of $1.27 against the dollar and BNP Paribas said the currency to reach parity by early next year.
Spreads on 10-year Portuguese bonds rose to a post-EMU high of 329 basis points (bps) over German Bunds, and rose to 296bps for Ireland, 150bps for Italy, and 148bps for Spain.
It is the first time in this crisis that Italy has started to flash warning signs. Bank shares plummeted in Milan, with falls of 10pc for Unicredit and 8.6pc for Mediobanca.
Gabriel Stein from Lombard Street Research called Mr Trichet's remarks "embarrassingly meaningless" and said it was hard to believe that the ECB had not discussed a move to quantitative easing. "Either the governing council is guilty of
(Excerpt) Read more at telegraph.co.uk ...
Bye Bye EURO ...
Bye Bye BABY ...
Deutschland ist nicht über alle Märkte in der Weld.
yitbos
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