Sunday, September 9, 2012

Europe's "Super Mario" Draghi Will Do "Whatever It Takes" to save the Euro

Earlier this summer, European Central Bank President Mario Draghi said he would do “whatever it takes” to save the Euro. This past Thursday, he said the ECB would buy the sovereign bonds of troubled Eurozone nations to address “short-term distortions in financial markets”. However, countries seeking assistance must agree to economic policies developed by the International Monetary Fund and other European authorities.

The actions of Mr. Draghi and the ECB are only one-step toward fixing the Eurozone’s problems, but it is a positive step. Concerns remain about: 1) Greece’s viability as a Eurozone member, 2) whether countries such as Spain and Italy are comfortable with the terms of ECB’s approach and 3) how supportive is Germany toward these efforts. For the moment, the Eurozone is not on the verge of a meltdown and most global markets had strong positive moves on the news. Time (and significant ECB funding) will determine if this effort is sustainable.

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