If there was one thing we were waiting for yesterday after the ECB’s Draghi and Noyer told Europe that they’re here to help, it was comments from Germany to see how much, if at all, they’d go along. At 5:16am on BN, the Bundesbank said ‘ECB bond buying is not the best way to address the crisis, it still opposes giving the ESM a banking license, it doesn’t object to EFSF bond buying and said gov’t deficits mustn’t be financed by printing money.’ Almost 30 minutes later, a French newspaper reported that the EFSF and then the ESM would buy Spanish and Italian bonds on the PRIMARY market (bold letters mine) combined with the ECB buying bonds on the secondary market. At 6:55am we finally heard from the German FM Schaeuble said he ‘welcomes comments from ECB Pres Draghi that the ECB will act within its mandate.’ With all of the above said, ‘within its mandate’ will be the debate between the ECB and Germany on what qualifies. And, the results of the debate will determine if the ESM gets leveraged or not. Merkel and Hollande have a phone date today to discuss Spain. Italian business confidence in July fell to near a 3 yr low and French consumer confidence was down by 2 pts.
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