Spain Calls For Unlimited ECB Buys Of Bonds
Calls for such action are growing. In an interview with state-owned news agency EFE, Spanish Economics Minister Luis de Guindos called for the ECB to purchase unlimited amounts of Spanish sovereign bonds on the capital markets. He argued that that would be the only way to effectively reduce interest rate pressure on Spanish sovereign bonds and to eliminate doubts about the euro.
ECB President Mario Draghi has signaled the prospect of the ECB undertaking that kind of step, but only under the precondition that countries such as Spain or Italy first make a formal request for E.U. aid, which would involve agreeing to the conditions attached to that assistance. The question of what a country would have to do in return for the ECB buying its bonds is expected to be discussed at a meeting of Euro Group finance and economics ministers that is scheduled for the second week of September, said de Guindos.
Spain and Italy have not yet decided whether they will formally request aid from the euro-zone rescue fund as demanded by the ECB. Spanish Prime Minister Mariano Rajoy has said he first wants to know precisely what a possible intervention on capital markets by the central bank would look like.
The government in Madrid is currently under pressure because it is being forced to provide backing to several Spanish regions that are in bad financial shape and are threatened with insolvency. Spain is currently establishing its own rescue fund worth a total of €18 billion to bail out the regions.
German Ministers Reject Additional Aid For Greece
Spiegel also reported in its Monday edition that Greece is facing major budget shortfalls. According to information the German news magazine obtained, the troika of the International Monetary Fund, the ECB and the European Commission recently determined that Athens is facing a budget shortfall of up to €14 billion, and not the €11.5 billion previously reported by Greece.
In Germany, however, leading politicians within Chancellor Angela Merkel's coalition government -- which includes the conservative Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU) and the business-friendly Free Democratic Party (FDP) -- reject any additional bailout packages for Greece beyond the two that have already been approved.
Volker Kauder, the head of the joint CDU and CSU party group in the federal parliament, the Bundestag, told Spiegel: "The Greeks must abide by what they've agreed to." And on Saturday, German Finance Minister Wolfgang Schäuble also rejected further financial aid for Greece. "We can't put together yet another new program," he said. "It is not responsible to throw money into a bottomless pit."
Intellpuke: You can read this Spiegel Online article in context here: www.spiegel.de/international/europe/european-central-bank-may-set-yield-targets-for-bond-purchases-a-850979.html