Sept. 10, 2012, 12:00 a.m. EDT
Euro optimism won’t last for long
Commentary: Germans can still block or delay ECB aid program
By David Marsh, MarketWatch
LONDON (MarketWatch) — Financial markets may chalk up gains for a bit longer following the latest instalment of Mario Draghi’s “do whatever it takes” performance to shore up weaker euro countries’ debt.
However, nerves will be running progressively thin. There is plenty of room for setbacks as traders digest the implications of the horrendously complex stand-off opening up between the European Central Bank president, the Bundesbank, and European governments.
While the different players tackle the awkward issues behind these various permutations, we may see a “phony war” across the heartlands of economic and monetary union (EMU). During this time, the ECB, far from wading into the market to fight speculation of euro “convertibility” (Draghi’s quaint name for the euro breaking up), may simply sit on its hands and do nothing. The longer this lull in hostilities lasts, the greater may be the ferocity when combat eventually resumes.
One point that seems to have escaped markets’ attention is that the German Parliament has an effective veto over the aid programs that have to be in place before the ECB can open up its heavy artillery.
More: http://www.marketwatch.com/story/euro-optimism-wont-last-for-long-2012-09-10
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