| The Ecb alone can’t resolve the euro-crisis, writes George Magnus |
LONDON - Draghi bond-buying plan will hurt risk assets. From the moment in late June that Mario Draghi vowed to do whatever it took to save the euro, investors flocked back to risky assets. The reaction to the European Central Bank’s outright monetary transactions (OMT) announcement, reinforced by the now validated expectations of American QE3, was the icing on the cake. To the markets’ delight, Mr Draghi’s plan is technically strong, and a smart, if covert, way of doing something that’s been rejected formally, namely leveraging the EFSF/ESM eurozone bailout funds.
Unfortunately, the plan is also economically unsound. The Pavlovian market response to monetary financing will again falter because the ECB alone can’t resolve the euro-crisis, writes George Magnus...
Financial Times
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