- ‘Harry Potter’ religion class seeks to enlighten students on ‘God, sin, and theodicy’
- ‘Optionally piloted’ Black Hawk helicopter clears tests; future missions to go ‘fully unmanned’
- Vice News reporter kidnapped in Ukraine is freed after being beaten, blindfolded
- FCC’s new ‘net neutrality’ proposal sparks outrage among consumer advocates
- Families of ferry’s lost confront South Korean officials
- 2-week truce for Sriracha hot sauce maker, California city
- NYC’s de Blasio seeks to ban wood-burning fireplaces
- Residents angry Obama mispronounced town’s name during mudslide visit
- Israel halts peace talks with Palestinians
- Netanyahu’s driver accused of raping girls under age 12
ECB’s Draghi: Bank may intervene on bonds
FRANKFURT, Germany — European Central Bank head Mario Draghi says the bank is ready to intervene in the bond market to drive down countries’ high borrowing rates, and urged European leaders to get their bailout fund ready to intervene as well.
Such a move could, crucially, lower the borrowing rates that are threatening to push Spain and Italy into financial disaster.
Draghi announced no immediate action. “Over the coming weeks, we will design the appropriate modalities for such policy measures.”
The words about adequate size appeared to address concerns that an earlier ECB intervention was not big enough to impress bond markets. That effort began in May 2010 and has been left unused since March after it did not decisively lower borrowing costs.
Financial markets appeared unimpressed by Draghi’s comments that the bank was preparing a new approach to get a grip on Europe’s debt crisis.
Before Draghi’s statement, stocks and the euro were buoyant. As he spoke they both went into reverse.
In Europe, Germany’s DAX was down 1.4 percent at 6,657 while the CAC-40 in France fell 1.3 percent to 3,278. The FTSE 100 index of leading British shares was down 0.7 percent at 5,675.
The euro was 0.2 percent lower at $1.2215.
In his comments, Draghi was careful to add that the bank would be acting independently to determine monetary policy and interest rates. It is forbidden by the EU treaty from using its monetary powers just to support government finances.
He said the eurozone governments “must stand ready” to use their bailout funds, the European Financial Stability Fund and its successor, the European Stability Mechanism, in direct market interventions themselves. Countries would have to ask for that help first, which would take time, while the ECB can act at any time.
The bailout funds could play a key role because they can enforce tough conditions in return for help, such as further economic reforms. That way the bond market intervention could take pressure off governments while not undermining governments’ resolve to cut their deficits and clear away regulation that slows growth and makes debt harder to pay.
TWT Video Picks
By Andrew P. Napolitano
Obama's veil of secrecy is pierced
- In its hunt for Senate, Republican candidates campaign against Harry Reid
- Obamacare class-action suit opens a new legal front
- 'Top Gun' for drones: Squadrons of carrier-based killers have Navy's approval
- List Hillary Clinton's successes? State Dept. spokeswoman flubs answer
- Nevada rancher Cliven Bundy hailed as patriot, ripped as lawless deadbeat
- 'Conservatives' should feel exposed by Bundy's racist comments: Scarborough
- America is an oligarchy, not a democracy or republic, university study finds
- Sold out: Ukraine's leadership swapped best military weapons for cash
- Texas is next! AG warns BLM wants 90,000 acres after Bundy ranch standoff
- Opposition rising to Colorado gun control laws
Top 10 handguns in the U.S.
Celebrity deaths in 2014