Monday, August 8, 2011

ECB "Signals" It Will Buy Italian and Spanish Debt

Since the CNN and Fox and CNBC and all the major network are ignoring this, I will tell you.  This is from Reuters.  Note that the ECB doesn't actually com right out and say they will buy Italian and Spanish debt.

ECB says will "actively implement" bond-buying
By Paul Carrel
FRANKFURT | Sun Aug 7, 2011 5:53pm EDT
“FRANKFURT (Reuters) - The European Central Bank said on Sunday it would "actively implement" its controversial bond-buying programme to fight the euro zone's debt crisis, signaling it will buy Spanish and Italian government bonds to halt financial market contagion.

After a rare Sunday night conference call, the ECB welcomed announcements by Italy and Spain of new deficit cutting measures and economic reforms as well as a Franco-German pledge that the euro zone's rescue fund will take responsibility for bond-buying once it is operational, probably in October.

"It is on the basis of the above assessments that the ECB will actively implement its Securities Markets Programme," an ECB statement said.

The statement marked a watershed in the ECB's fire-fighting efforts after modest bond-buying last week failed to stem contagion to the currency bloc's larger economies.

It did not explicitly say that effort would now include buying Spanish and Italian paper, but the fact that last week's purchases were confined to Irish and Portuguese paper drove Italian and Spanish 10-year paper to a 14-year high.”

I am really starting to like Reuters.  They actually have a network of foreign correspondents.

And by the way, the ECB will need to create some money to do this.  The price of gold will go up as the money supply inflates, particularly with respect to the Euro.  Short the Euro and buy gold instruments.

As I write this 18 minutes after the world gold market (Globex) opened at 1800 EDT on Sunday,  the price of gold has jumped to a new record high of $1691.40 USD.  More to come.

It will be interesting to see what the stock market does tomorrow.  I am particularly interested in my investment in FAZ.  I may just stay home from work, buy some popcorn, and watch the show.

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