news for Gold And Mony
rock of stability in the middle of the euro storm
We witnessed a somewhat disappointing performance from the ECB’s Mario Draghi yesterday, at least for those that were expecting the “big bazooka”, and many in financial markets were. After all if the ECB is to exceed its treaty-defined mandate, it might as well get the go-ahead from the original source of that mandate: elected representatives of euro-member countries. So the central bankers left their options open and passed the buck to the politicians meeting today.
That does not mean that nothing was done, interest rates were lowered to 1%, historical lows for the common currency, which leaves the most important currencies in the world all in negative real rate territory as this interactive chart shows.
Markets expressed their disappointment with zest: EURUSD, major European indices and Brent crude plunged, risk spreads and euro debt yields rose. Even gold fell from above $1,750 per troy ounce at the beginning of Draghi’s speech to a close just above $1,710, although the gold price in euros remained near its €1,300 per ounce peak.
So that brings us to yet another make-or-break, edge of the precipice, 11th hour meeting of top EU players ready to save the euro, and if doomsayers at some respected financial firms are to be believed, civilization itself.
As of this writing it looks like no agreement has been reached on the major sticking points: Eurobonds, EFSF and ESM and other bailout measures, in fact the heads of government at the summit seem to want to hand the responsibility back to the ECB. "When all you have is a hammer, every problem looks like a nail". All the ECB has is an electronic printing press.
rock of stability in the middle of the euro storm
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