Market Makes a Liar Out of Mario Draghii

      Last week he had promised to do "whatever is necessary" to save the euro and "believe me, it will be enough."

     His first action post Chuck Norris is not encouraging. The deep "credibility gap" of the ECB has certainly not been meaningfully been closed. He did much like Bernanke did yesterday-promised to do open market operations if needed, In some ways his comment was even worse than Bernanke's as he still mentioned the need to make sure inflation stays contained.

     What's more, the EU needs help more the the U.S. does:

     "Today, ECB President Mario Draghi said that the central bank may undertake outright open market operations within its mandate to help bring down bond yields and that it will design plans over the coming weeks for such measures. This fell short of what the market was looking for after Draghi last week pledged "do whatever it takes" to save the euro. The ECB also left its key benchmark interest rate unchanged at 0.75 percent. (Read More: ECB Provides a Little Breathing Space, But No More)."

    “This was a big disappointment for the market because it was not immediate action,” Marc Chandler, chief currency strategist at Brown Brothers Harriman said. "All major central banks did nothing but hold out the promise of big action next month.”

     http://www.cnbc.com/id/48460893

     "The Bank of England left its monetary policy unchanged as well today despite signs of growing economic weakness. In July, the Bank expanded its buying of government bonds to provide additional stimulus. European markets finished sharply lower following the ECB meeting and Draghi press conference. Spanish and Italian banks tumbled."

      So everyone thinks we can just wait a month. However, if you take the analogies seriously of what you so often hear about central bank action as "firefighting" it obviously is not best policy to wait until you're absolutely sure help is needed.

      "Turning to economic news, Factory orders for June fell 0.5 percent versus expectations for an increase of 0.5 percent. Also, the Labor Department reported that initial jobless claims for the week ending July 28 rose to 365,000 from 357,000 the prior week. Economists were looking for initial claims of 370,000. "

       Last week, Nick Rowe had said he wasn't too impressed by Draghii's impersonation of Chuck Norris. Clearly the markets weren't.