How many fires can you (the ECB) put out? Ironically, dousing one sends hot embers drifting over Europe to only start a new fire in the direction of the prevailing winds.
Draghi may have a red phone straight to his former home and one Bennie B., but it seems his helicopter has too many destinations, especially today, whereas Uncle Bennie's only has 1.
Yes, the spike in the markets (no doubt front run by those who colluded with the ECB on Operation Italy this morning) have lost that loving feeling as well as the massive green gains of +3% that should have been printing by now.
Why? French Bunds just hit a new record spread over rumors that the only rating agency out there that seems to act in a useful and timely manner, Egan-Jones, will be eyeing France for a downgrade review.
And that's not all.... Furthermore, Austria (remember I'm a card carrying member of their lying/exposed mega-bank ERSTE) will have a visit from Moody's in 2 weeks to asses the situation on the ground and possibly downgrade Austria's AAA rating status which makes them eligible for the time being, to fund the EFSF, however, anything less then the coveted AAA, which is now seemingly in danger (ERSTE probably wasn't helpful in this situation), takes Austria off the list or the hook depending on where you stand and puts more pressure on France and Germany, but France as explained above may face their own rating's problems, putting all of the pressure on Germany, which by then, may also come under scrutiny. Hungary and Belgium are on the list as well.
Meanwhile it is looking like the ECB's only fallback will be to print (and if Draghi is consulting one Bennie B, it is likely that is the advice he has been given). It's already been proven that the ECB has been doing exactly that, much to the dismay of Germany who still recalls what printing and hyper inflation can do by example of one Weimar Republic. It appears at least $970 billion Euros have already been freshly printed by the ECB, which Germany (and this is part of the Merkel-Sarkozy disagreement) is adamantly opposed to having had first hand experience with the effects of printing and hyper-inflation and this may just be the reason why the ECB is a lot less German then it was not too long ago with the resignations of Weber and Stark and why the ones that are still left, are saying Germany has had just about enough of it.
Just today, Germany's Bundesbank reports,
*BUNDESBANK SEES NO SIGNS OF CREDIT CRUNCH IN GERMANY
If the ECB continues down this path, perhaps the Wikileaks cable released last week may be more accurate then the news from yesterday of a new EU, one that has far fewer members. Perhaps as Wikileaks suggested, actually Germany suggested and Wikileaks just passed along the intercepted cable, that Germany is considering exiting the EU altogether and going it alone.
Wouldn't that be something, especially if they were the only AAA country in Europe left.
As I mentioned 2 nights ago, these are the signs of the end of the party, rumors and rumors of rumors and accelerating rumors and news, all leading to massive distrust between the key players. We are there.
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