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WHEN EUROPEAN Central Bank head Mario Draghi said that he was ready to “do whatever it takes” to save the euro, he fuelled investor hopes the bank would again start buying government bonds to lower borrowing costs for struggling countries.
Just one problem: the ECB has tried bond-buying before. And it didn’t work very well — the action was seen as too hesitant and fell short of decisively lowering borrowing costs for stricken Spain and Italy.
Draghi is certain to face questions today at his news conference after the bank’s government council meets about possible bond purchases and the financial turmoil in Europe.
Last week, Draghi noted that excessive government bond interest rates “come within our mandate” if they are hindering the ECB’s efforts to spread its single interest rate policy throughout the 17 countries that use the euro. That was seized on as a hint the bank might restart its Securities Market Programme that bought bonds in the open market, but which has been left dormant since March.
Bond purchases drive their prices up and their interest rates, or yields, down. The ECB’s earlier purchases temporarily drove down the yields on government bonds of Spain and Italy, making it less expensive for these countries to finance their deficits.
Expectations
Analysts say that Draghi has raised expectations for action so high that markets could be sorely disappointed if no new bold measures are announced today. An interest rate cut from the current record low of 0.75 per cent remains a possibility, though many analysts think the bank will wait at least until September. Market attention is most intensely focused on what Draghi will say about the bank’s willingness to influence the market for government bonds.
Slavena Nazarova, an economist at Credit Agricole expects Draghi to emphasise the bank’s willingness to use all its weapons to support the eurozone — but take no new actions: “We are skeptical that such intervention will come as soon as this week, so there is quite a big risk of disappointment for the markets.”
The Federal Reserve said Wednesday that the US economy is losing strength and repeated a pledge to take further steps to boost growth if hiring remains weak. The Fed took no new action after a two-day policy meeting. But it acknowledged in a statement released after the meeting that economic activity had slowed over the first half of the year, with job creation remaining sluggish and consumer spending tapering off somewhat.
For the ECB, simply re-starting the SMP remains problematic. The bank first used the programme in May, 2010 as Greece headed for a bailout, then paused it. It was re-started in August, 2011 as the crisis spread from small countries such as Greece, Ireland and Portugal to countries whose governments are too big to easily bail out — such as Spain and Italy.
But after an initial dip in yields, Spain and Italy soon saw them rise again. The problem was that ECB said the programme had to be limited — a statement that kept it from overly impressing the bond market.
On top of this, there was opposition from the Bundesbank, Germany’s central bank and a high-profile member of the ECB’s board. The Bundesbank remains skeptical of bond purchases, saying they come too close to breaking the ECB’s founding treaty, which forbids it from financing governments.
Because of the treaty restrictions, the ECB must claim the bond purchases are meant to ensure its ultra-low interest rates are being passed on to all borrowers throughout the eurozone.
It’s a restriction not faced by the US Federal Reserve and the Bank of England, both of which have engaged in large-scale bond purchases to expand the supply of money in their economies and try to boost growth.
Here are some other possibilities the bank might look at, all with drawbacks:
— Team up to buy bonds with the eurozone’s bailout fund, the European Financial Stability Fund — or by its replacement, the European Stability Mechanism. The problem is that the EFSF and ESM have limited funding left after bailing out Greece, Ireland and Portugal
— Offer another round of cheap, three-year loans to banks, as the ECB did in December and February. Some of the €1 trillion taken by banks was used to buy government debt, lowering borrowing costs for several weeks. But banks buying bonds raises the threat that if a country defaults on its bonds, the banking system would be hit. That would hurt credit availability, choking the economy.
— Leave any bond purchases to the EFSF/ESM. The ECB could express willingness to buy the bailout funds’ bonds in the open market. That means the ECB could support the effort indirectly.
— Drop the ECB’s insistence on being paid in full on any of the bonds it owns in case a country defaults. Such ECB “seniority” could make investors afraid they would be behind the bank in the line to get paid back — and lead them to demand higher yields on a country’s bonds. That’s the opposite of what the ECB would be trying to achieve. But if the ECB makes a loss on their bonds, that’s passed back to the governments that finance it.
“A reactivation of the SMP only makes sense if other measures are decided on,” such as dropping the bank’s preferred creditor status, said Christoph Balz, analyst at Commerzbank. He warned that dropping that “seniority” status could create new problems. Any ECB losses would be passed back to national governments as part of the bank’s profit or loss for the year. That means losses on Spain could hit troubled Italy, for instance.
Such a change “is not so easy to do,” Balz said. “This argues for Draghi likely not making any announcement this week of any big programme to buy bonds,” said Balz.
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Im just throwing this out there but my vote has absolutely nothing to do with my political allignments nor was my vote in this matter influenced by the agenda of any political party. A vote for the retention of the upper house should not be taken by Fianna Fail as a victory for them.
exactly, but you know that they will try to put it out that way.
Just the usual FF arrogance.
Just goes to show how out of touch with the county these clowns are.
country
Annoying as it is, it merely balances FG’s…
No mater which side won we would have this type of rubbish , I certainly wasnt thinking of FF when I voted. Im bewildered how well the do in recent polls
@Angela Has a date been set for the rerun or have you finally accepted that this result WILL stand?
I voted No in this referendum as deep down I think the Seanad if we are to keep it needs to be reformed and fit for purpose. We have a chance of doing that if its retained. I certainly didn’t do it because FF said I should or in the same breath vote Yes because FG, SF and the fraggle rock lunatic left said I should. If the people have spoken and a No vote is carried, reform the damn thing once and for all. Make it fit for purpose and not a halfway house for wannabe and failed politicians and cronies…
Well said Darragh.
Rubbish, you only speak for yourself.
Fianna Fáil led the fight for retention of the Seanad and this is down to their hard work.
Your partizan views aside.
I will believe it when i see it Niall
To all the idiots who wrote “reform” on their ballot paper results from Tipp North showed a margin of difference of 201 with 417 spoils!
@Seanie That’s absolute BS and u know it. Voters can decide for themselves and FF had NOTHING to do with the decision of the vast majority of voters!
FF done nothing for my vote.i done the thinking for myself
Hahahaha……. oh dear Jases that made me laugh…
These delusional idiots actually think they were instrumental in this result…
Oh dream on ff…
This was done out of pure distrust of this government .
seanie is a f fail troll
I’m laying out the facts. Fianna Fáil position against all others was vindicated with over 50% of the electorate agreeing that the Seanad must be kept.
They may not all have been swayed by the debate but it certainly did for a lot of people.
The fight back is well under way, bring on the local elections.
ryan
you are one prize clown, a pure inbred f failer. Bring on the civil war.
Agreed…FF had no more to do with swaying my decision than the cast of Sesame Street.. If FF take any glory as a result of a no vote, they’re even more deluded than we thought.
it will be a sad day for this country if that shower of liars, and crooks ever worm their way back in to power. bring on the local elections is right, so we can begin to get the current shower of liars, and crooks out. Party politics are inherently undemocratic, and the old school voters in this country who vote for parties and not on the merit of policy, honesty, and capability need to wake up. we have brilliant people in this country who can’t get a look in.
FF would have serviced this country better by disbanding in 08′. Debates in the Dáil usually turn into a farce with the leading side telling their opponents “Its your fault we’re here”! Really productive.
Lol Seanie, you really are away with the fairies
Can we have a referendum on making FFailed an illegal organisation?
Seanie , you’re probably a well meaning person but let me spell this out.I listened to my own better judgement in voting no and not due to the populist spin that was spouted by a party of pocket lining politicians that is Fianna Fail.Also for the record , the current government are no better.Thank you.
”Just goes to show how out of touch with the county these clowns are.”
– they are in touch with Frankfurt and their bosses – that to them is far more important – we are only fleas on a chessboard .
I voted to reject an ill advised amendment. I did not, never have and probably never will, vote for Fianna Fail.
My No vote was not the result of Enda Kenny skipping a debate or anything to do with anyone’s personality. I voted No because the argument for a Yes vote didn’t hold water. Of course, the fact that the Yes campaign was based on deceit and misdirection was a bit of a giveaway that they in fact had no good argument to make.
Next time put together a proposal for how the government should work in the future. Clearly communicate that vision. Then put together a realistic plan to get us there. Then and only then will it be appropriate to have a referendum to start making fundamental changes.
Well said Aidan
Well said also Gavin Hoey.
Like it not FF campaigning for a NO was a vital factor in the NO victory. That’s not to say that the victory is entirely theirs and I am not sure they are claiming it as such. There were a number of other vital factors and contributions that delivered the result. But had they supported the YES, like the populist SF, then the result would have been different and be in no doubt about that.
the people have spoken . HOW COULD FF BE TRUSTED WITH POWER AGAIN
I agree with it was a vote by the people that their is a need to have a second house government from any of the main parties Fianna Fáil and Fianna Gael cannot be trusted
Which County ?
Why do political parties think they have swayed peoples vote.not mine i voted no of my own volition
FF through policies that destroyed this country.
“Put” through
Dave that is rubbish. You just want someone to blame for your own mistakes.
They hardly did a good job now, did they?
Richard,
I strongly believe that history will show Prom Night to actually be the moment the country was led to bankruptcy.
Until that night, this Government had opportunity to reverse the previous ones mistakes and to question it’s obligations in relation to a guarantee based on fraudulent statements made by the banks.
@Seanie where have you been living? On the moon if you think FF have not responsible for most of the grief this country is in. FG aren’t much better but FF should be consigned to history.
FF make me sick to my stomach.Never forget FF are the party that turned this country into a cesspit.
Hear hear. Never forget.
What about the labour/FG controlled city councils that handed out crazy planning permission during the boom. Are they blameless?
We were all better off under FF even the people coming in from other countries ye are just a bunch of hippacrits
Hi lads sorry to burst your bubble but fianna fail had nothing to do with it , people dont trust enda -plain and simple . By the way if the motion was to abolish Fianna Fail it would have passed!!!
Rubbish. FF have been polling 26-28% in several polls. If there was an election this year Micheal Martin would be looking at forming the Govt.
Your are mistaking your own beliefs as concurrent with the electorates.
Seanie, keep going. You’re a barrel of laughs.
Nothing to do with Fianna Fail as they would have done the same if they were in power. Never forget its them that got us into the current mess. Fingers crossed for the no result
I voted no… My decision had NOTHING to do with Fianna Fail!
The evidence suggests that for most people it did. People looked at the debates and considered who they trusted. Micheal Martin spoke from the heart and made the difference.
This is a game changing victory for defending democracy in Ireland and for Fianna Fail.
How can you speak for most people.are you really suggesting we need fodder from political failures to make our minds up
I saying that people responded to reasoned argument and the leadership provided. Fianna Fail’s base is till around 26-28% and the party worked hard to get that vote out.
People might have wanted a No but it was the FF voter base that took the effort to turn out. Let us not pretend that FF did not drive the result.
As a limerick man I have to say niall Collins is a clown, he desperately wants to be minister for justice when he is clearly more qualified to be the minister for buffoonery.
If Niall Collins what does that say about you a moron perhaps or worse.
English please, are ye related? Both of ye have a problem with the English language.
Drop dead Dalai.
“Ye”
seanie ryan, the fianna fail man who said that if sinn fein got into power that the army and guards would be replaced by ira men.
still rflmfao at that one……….lol………….lmao……………lol lol lol lol lmao……………..aaahhhhhhh ha ha ha
Dalai Obama not your real name I’d say why don’t you show your face and your real name or are you too gutless come on be a man
I voted the way I voted having read and researched myself, not because of some campaign by any of the politicians :)
Bravo, this country needs more people like you. Well done on taking the time to read up on it and going out to vote.
Yeah and yese did a grand job of demolishing the country too lads
What an absolute ass. Its obvious the people didn’t take one single iota notice of Fianna Fail, Fine Gael, Labour or Sinn Fein. Even the bloody socialists supported the government on this for the love of god! The Seanad was always going to be a difficult one and I for one was surprised polls suggested it would be a landslide. Asking people to abolish a parliament in favour of possible further reform of an existing one which was given very poor reform in the past two years on the back of major reform promises given during the election? I for one didn’t feel comfortable with that proposal and would prefer the very very slim chance that the Seanad may well one day actually do something useful in its current form and I hoped (but don’t expect) reform of the parliament if we voted No.
Fianna Fail were the party who came out with various reports on reform and the Seanad, including one which gave the costing for the running of the parliament. They switched sides late on purely for political reasons and not for the good of the people. This is a party that has not changed since being booted out of office.
Just like when they came out against the property tax having signed up to it under the Troika MOU… ‘Its the wrong time…’
Bunch of hypocrites… It’s becoming next to impossible to support any political party in the country. A new political party / perspective is needed (I don’t mean a party like Direct Democracy or a form of ‘New Labour’ mind…)
FF didnt even put together legimate reasons for a NO vote … what a bunch of noobs …. we should have a vote to abolish the dail
Fianna Fail, do not think for one moment that a no vote here, should it be realised, is an endorsement of your party or your arguments during the campaign. You changed opinion on this topic mid stream, had ample time in power to address reform. Also, political point scoring rhetoric against other parties is nauseating, you scrotes.
My 7 year old couldn’t understand why anybody would want to vote to abolish the shannon. Poor lad genuinely thought that was going to be end of the Shannon river for ever!
People voted no as a vote against the government and Enda Kenny. Some of course there were those fearful of the legal implications of abolishing the Seanad. Some just wanted to see it stay. Whatever peoples reasons, FF had little or nothing to do with peoples decision. The Irish people are waking up, our memories are little longer than these traitors think.
Angela look in the mirror before you call people traitors
Angela you are fairly deluded if you think FF hadn’t a big hand in the no victory I’d say the most of ye sending in messages are the far left and Sinn Fein lapdogs
It’s the people that regardless of political affiliation that voted No or Yes. We still care that little much about democracy. Fianna Fáil sh*t all over the constitution for years. I didn’t because of any party you you fool.
Aaaaaaahahahahahahahahaha Fianna Failure are still deluded
I voted no but never in my lifetime would give FF a vote.
FF trying to big up M Martin . He’s a throwback to Bertie and Cowen and they must feel at this stage that he’s a liability. Result has sfa to do with so called FF campaign
The audacity of FF to think that they swayed people to vote no. my no vote had nothing to do with their opinions on the abolition of the Seanad. can’t get over the cheek of them.
Agree with Hazel…..Whatever kudos FF got by the good No vote , they blew it with arrogant statements like that..
Those FF statements assume that people looked to their politicians for guidance…Wrong Lads…People used their brains for guidance…!!
FF are sewer rats.
You would know about sewer rats being one yourself
That the best you can do you, FF pond life?
I voted of my own accord. But it’s nice to see enda getting one in the eye. Wonder will he show his face or will state commisar bryan dobson be allowed to show it
There’s no end to this party’s arrogance, why do they still even have a voice, the people keeping them up must all live in burrows.
FF can go f**k off.
The blind arrogance of the Fianna Fail mindset never cease to amaze & disgust me! I voted No precisely because I dread the thought of their ilk having unfettered power if re-elected to government. The Seanad needs reform but the citizens of this country also need a system of checks & balances in place to maintain an eye on government policy. Mary Robinson was never an elected politican but she came to prominence as a Senator. A reformed Seanad with people of her integrity could make a powerful contribution to this country …
What a completely deluded individual and party. The smugness and arrogance of FF hasn’t gone away in the slightest.
No argument won or lost this, it was a shite ballot paper that caused mass confusion.
people couldn’t understand a simple ta/nil, put the x in the box?
Don’t be so quick to take credit Fianna Fail….a No vote in the Abolition of the Seanad Referendum wasn’t in any way a vote of confidence in the Fianna Fail party.
I voted to keep the Senate not because of FF, but in spite of FF, wanting to keep it!
I voted no, because what believed not because of what the shower of wasters in FF said
FF put this country on its knees… They done more damage than good in the past. I hope to good God people remember the shower of idiots they are. They had nothing to do with my No vote full stop
I went against party allegiances by voting no. Reform the whole system
The Irish electorate had a vote to reform government, they chose to continue to be governed by the elite for the elite
The mind boggles
Anybody heard from ritchie rogers today? Has he gone and changed his name again?
No votes have everything to do with ff, end of story. Why didn’t they reform it when the were in power and by look of their support they’ll be back in power again to make another of the country and the people of this country deserve it.
Yeara ya, FF made me do it.
They are certainly the party of demolition. Can’t argue with that.
‘The party’s diretor of elections’ – ‘diretor’ should read ‘director’.
says the unionist fcukpig dictator Patrick lyons.
Forgive my language. I wish those w&nkers would F@@k off. Martin had absolutely no hand in my decision to vote no. Hateful b@stards the lot of them and this is coming from an ardent FF supporter. Never again!
Collins you idiot , just how thick do you think we are . The creeping mistrust of the political system which contributed to the no vote is largely based on our experience of the incompetence of your party . … You and your like make me want to f”@&£&@” scream
Shut up Seanie… FF like new Labour in England did just looked at the polls and backed a winning horse! Now they have succeeded in their heads to separate themselves and their so called policies from FG and create a viable opposition! It’s crap and I don’t buy it!
Kevin
Fianna fail may not have swayed ever voter but at least they provided opposition, alternatives and debate.
The past failures during the tiger were due to a failure of genuine opposition, debate and contrary opinions. Those who failed to oppose and do their paid duty of opposition unburdened by governing are now ministers. The duty of the opposition is to oppose and challenge for the good ofall and as such are the key regulators in democracy… Let’s see no if our leaders can provide real reform as they promised…..people are judged by their promises…..oh wait….
So Robert now ff are to blame for all the cuts the present government have to make! I know your answer: no. The truth is ff made a shite of the country when they were in power and history will show they’ll do it again and again. And it was nothing to do with the opposition. And what did seanad do, sweet fa
The Government won no matter what the result, If the people had voted YES then they achieved their objective and as it looks the people voted NO, the people can no longer moan about the Seanad. A WIN-WIN for Enda peeps!
I think the FF people will be delighted that they were on the winning side. Their battle is with SF and I think SF backed the wrong horse. They went from a pro-Seanad stance to a view to abolish in the past few years. Similarly, I think SF picked the yes side for the very same motives, they got it wrong.
However, you cannot entirely dismiss the FF contribution to this victory. They still maintain significant grassroots support and membership throughout the country and with a victory of less than 48,000 votes, you can’t completely discount their contribution to the debate and subsequent outcome.
I wouldn’t be going that far, Niall.
have your say