The war of wills between ECB chief Mario Draghi and Germany’s Bundesbank continues, as the chance that the European Central Bank will have a free hand in buying sovereign debt of weak nations in the region dwindles. The battle continues to worry markets, which believe that Spain is near default because its borrowing costs are more than 7% on 10-year notes and it has no stimulus to cut into its 25% unemployment rate.
Germany has taken a radical stance, based on a public declaration that it controls the destiny of the ECB. The notion may seem brash, but it is true. Bundesbank President Jens Weidmann said, “We are the largest and most important central bank in the Eurosystem and we have a greater say than many other central banks in the Eurosystem,” according to Bloomberg. It is his ball and it appears he will take it home so none of the other nations can play.
Douglas A. McIntyre
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