As Europe Desperately Attempts To Talk Down Bond Yields Further, Bundesbank Finally Says "Nein"

Tyler Durden's picture

Following two days of desperate attempts by the ECB to talk down record peripheral bond yields without any actual action, it is only logical that while Merkel is on holiday, we get a third day of talking to buy some time purely thanks to rhetoric and jawboning, before the Chancellor comes back and spoils the party. Sure enough, here it comes via French Le Monde, whose host nation knows very well that after Spain and Italy, France is next:

  • ECB PREPARING TO BUY SPANISH, ITALIAN DEBT, LE MONDE SAYS

More from Reuters:

Euro zone governments and the European Central Bank are preparing to intervene on financial markets to help bring down Spanish and Italian borrowing costs, French afternoon daily Le Monde reported on Friday.

 

The newspaper, which cited unnamed sources, said the ECB was willing to take part in the action on condition that governments agreed to tap the bloc's bailout funds, the European Financial Stability Facility and the European Stability Mechanism.

 

Under the plan, the EFSF could be activated first to purchase Spanish and Italian debt on the primary market, followed by the ESM in September, after it becomes operational.

 

The ECB would at the same time buy Spanish and Italian government bonds itself on the secondary market.

 

The newspaper said the plan was days or possibly weeks away from being finalised and that officials were holding consultations on Friday about it.

Ah, the good old unnamed sources which always appear in times of need... and of Merkel summer vacations. But while the cat may be away, the Bundesbank has decided to take at least some matters into its own hands:

  • BUNDESBANK SAYS IT HASN’T CHANGED STANCE ON ECB BOND BUYING, REMAINS OPPOSED TO FURTHER BOND BUYING BY THE ECB

More from the WSJ:

"Germany's central bank remains opposed to further government bond purchases by the European Central Bank, but isn't against using the euro-zone's temporary rescue fund (European Financial Stability Facility) doing so to drive down soaring sovereign borrowing costs, a Bundesbank spokesman said Friday.

 

Germany's central bank regards further bond buys by the ECB as "problematic" and "not the most sensible" instrument for overcoming the debt crisis, in particular because they create false incentives for governments, the spokesman said."

And then, just to confirm that nobody in Europe has any clue what is going on and its politicians are once again simply making things up on the fly, we get this:

  • HOLLANDE-MERKEL TO SPEAK BY PHONE AT 1 PM ON HELP: LE MONDE

And the logical response:

  • STREITER SAYS `DOESN'T KNOW' ABOUT MERKEL-HOLLANDE CALL

Sigh - when one sees such relentless lies and confusion what else can one say but... "Europe."