Swing by www.gainspainscapital.com [7] for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.
Mr Draghi… a few questions for you…
You say that whatever measure you take… it will be “enough” to support the Euro. Seeing as you’ve already spent over €1 trillion via your LTRO 1 and LTRO 2 schemes only to find that:
- The uptick in EU banks shares lasted less with each new scheme
- The bond and credit markets punished those banks who sought funding via these vehicles
…my question is… what exactly is “enough”? Obviously €1 trillion wasn’t. Would €2 trillion be? What about €5 trillion? Seeing as banking deposits at the troubled PIIGS banks exceed €5 trillion alone, it seems even €5 trillion wouldn’t be enough to backstop the EU and get it out of this mess. So could you quantify “enough” please?
My second question would be… if you were to announce some “Hail Mary” policy of monetizing trillions of Euros worth of sovereign and banking debt, how would you stop the Euro from imploding?
You’ve no doubt observed the impact that QE 1 and QE 2 had on the US Dollar. How would you stop the Euro from collapsing if you were to announce an amount that would indeed be “enough” to contain the EU Crisis? As the below chart shows, the Euro is already on the ledge of a very big cliff.

My third and final question… thus far the ECB, when acting in concert with Germany and the IMF, has failed to contain the Greek crisis (there is now talk of Greece needing a third bailout)… how exactly do you intend to handle Spain or Italy (economies and banking systems many multiples larger than those of Greece)?
After all, if the ECB didn’t have “enough” to handle Greece, what makes you think you have “enough” to handle Spain or Italy? I note regarding this last point that Spain’s bonds are falling again despite a shotgun bailout of €100 billion just a few months ago.
If you actually have answers to these questions, I’m sure the world would love to hear them.
Graham Summers
Swing by www.gainspainscapital.com [7] for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.
