EFSF is DOA, that leaves the ECB and they have something interesting to say

Being the ill-concieved notion of leveraging up the EFSF has yet to gain ANY traction at all, countries are looking at the ECB as the 'lender of last resort", ironically after today's "grey intervention" in Italian debt, the ECB releases this according to Bloomberg:

ECB’s Policy Makers Say They Can’t Do Much More to Stem Financial Crisis

Some excerpts:

“Not much more can be expected from us, it’s up to the governments,” Governing Council member Klaas Knot, who heads the Dutch central bank, told lawmakers in The Hague today. Three other policy makers have also publicly rejected calls for more ECB intervention and two further officials, who spoke on condition of anonymity, said the central bank has no plans to make its purchase program unlimited.

In addition, the ECB has so far bought 183 billion euros of government bonds from debt-strapped nations, purchases is says are aimed solely at ensuring its interest rates are transmitted on financial markets. To prevent the purchases from fueling inflation, it sterilizes them by draining the same amount of money they create from the banking system.

Knot said the ECB can maintain its bond buying as long as it can continue to remove the same amount of money from the system. “The bigger the portfolio, the more difficult that becomes,” he said. “Interventions can only have a temporary and very limited effect,” Knot added.

Rabobank economist Elwin de Groot estimates there is a “natural limit” of 300 billion euros in government bond purchases the ECB can sterilize.

Bond buying with the aim of bailing out a government is monetary financing and prohibited by the euro’s founding treaty, Bundesbank President Jens Weidmann said this week. He cited Germany’s experience of hyperinflation after World War I as a reason why such action should never be contemplated again.

The debt crisis is pushing the economy into recession. The European Commission today slashed its euro-area growth forecast for next year to 0.5 percent from 1.8 percent.