We are witness to the internal deliberations of the FOMC - Euro style.
I'm still amazed they talked the ECB into this plan. They were surviving fine without any monetary stimulus at all.
Now, it's a competitive devaluation to encourage the export sector.
* * * * * J B K * * * * *
San Francisco
The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders.
By Ambrose Evans-Pritchard
Published: 5:30AM BST 11 May 2010
Jean-Claude Trichet, the ECB's president, denied there had been any political interference. "We are fiercely and totally independent," he said.
It is clear, however, that the two German members of the ECB's council voted against the move, a revelation that may cause a catastrophic political backlash in Germany.
Axel Weber, ultra-hawkish head of the Bundesbank, told Boersen-Zeitung that the emergency move over the weekend had been a mistake. "The purchase of government bonds poses significant stability risks and that's why I'm critical of this part of the ECB's council's decision, even in this extraordinary situation," he said. The rebuke is devastating. The ECB draws it authority from the legacy and aura of the Bundesbank.
