Draghii: The Euro is Irreversible

     The markets loved the ECB move today. You saw both Europe and the U.S. soar on the move. To be sure, in the U.S. we had some very good economic indicators with a spike in private jobs, a drop in unemployment claims and surge in service sector growth.

     http://diaryofarepublicanhater.blogspot.com/2012/09/markets-explode-on-economic-news.html

     In Europe they finally got an agreement. In July, the markets had been excited after Draghii promised some shock and awe-he would do anything necessary to save the Euro.

     However, the markets cooled as like in a Mitt Romney speech there were no details about how Draghii intended to get there.

     "European Central Bank Chief Mario Draghi said the "euro is irreversible" as he announced an "unlimited" new bond-buying program at a press conference in Frankfurt, after the central bank decided to keep its benchmark interest rate on hold."

      "The program called "Monetary Outright Transactions" or MOT would focus on the secondary sovereign bond market. Draghi said it was necessary to deal with "severe distortions" in the bond markets."

       "Draghi said the decision of the Governing Council wasn't unanimous and that there was one dissenter, though he declined to name the person."

       http://www.cnbc.com/id/48924212

       Hmmm. I wonder who the dissenter might be?

       "Meanwhile, the head of the Eurogroup Jean-Claude Juncker said the meeting of the ECB's Governing Council went well and there was "no trouble."

        "The head of Germany's Bundesbank, Jens Weidmann, has strongly criticized bond buying plans, saying they encroach on the taboo against central bank funding of state budgets. (Read More: Weidmann Resignation Rumors Symbolize Euro Zone Split)"

        "Draghi defended the bond buying in the face of strong opposition from Germany as being within the ECB's mandate of safeguarding the euro."

        "Let me repeat what I said last month. We are strictly within our mandate to maintain price stability over the medium term," Draghi said.

         Yes. I guess the dissenter left no clue as to who they might have been.

         Certainly this couldn't have come at a more important time:

          "At the press conference, the ECB also announced it was cutting its 2012 growth forecasts for the euro zone to -0.6 percent to -0.2 percent, lower than its forecast in June of -0.5 percent to 0.3 percent. The gloomier outlook also pressured the euro."

        Ugh! The bullish case is for -0.2 percent growth. Germany itself may yet be scared straight:

        "Significant pressure was put on the European Central Bank Thursday by a report of the Organization for Economic Cooperation and Development that suggests the German economy will contract 0.5 percent in the third quarter and 0.8 percent in the fourth quarter. Because of Germany’s much stronger performance in the first half of the year, the O.E.C.D. estimates that, over all, the German economy will grow 0.8 percent this year.:

       "Until recently, Germany had avoided the worst effects felt in many other nations in the currency area. In a tacit signal that Germany’s chancellor, Angela Merkel, is fully on board with the European Central Bank’s bond-buying plan, she met Thursday in Madrid with Mariano Rajoy, the prime minister of the country that could be the first to seek assistance from the program: Spain."

       http://www.nytimes.com/2012/09/07/business/global/european-central-bank-leaves-interest-rates-unchanged-at-0-75-percent.html?pagewanted=all