Friday, July 27, 2012

Life imitates art...

I have always been a fan of the movie "The Road Warrior", a film Chicago-based critic Roger Ebert claims is  "one of the most relentlessly aggressive movies ever made".  A voice in the beginning (implied to be the future adult version of a feral child who befriends the central protagonist) sets the plot thusly:

"...They'd built a house of straw. The thundering machines sputtered and stopped. Their leaders talked and talked and talked. But nothing could stem the avalanche. Their world crumbled. The cities exploded. A whirlwind of looting, a firestorm of fear. Men began to feed on men..."

Now, I am not advocating Apocalypse, quite the opposite in fact given the general themes explored by this blog, but it is always amusing to observe the next political appointee attempting to use rhetoric and speeches to succour the masses into believing the underlying problems are "under control".  In the case of Europe, the below remarks by Mr. Draghi are only yet another attempt to manage the news cycle.  Given multiple downgrades of EU member debt, and the fact that large institutions typically are forbidden to hold anything approaching junk status, there will be plenty of opportunity for the ECB to go on a buying spree.

Mario Draghi, president of the European Central Bank, has promised that it will dowhatever is necessary to preserve the euro. This appears to be a not very veiled promise that the central bank will buy euro-zone sovereign debt.
After days of further market attacks on the single currency through selling of Spanish and Italian sovereign debt, Mr. Draghi has had enough.
The single currency is “irreversible”, he said, adding that the “euro zone has the power to defeat market speculation.”

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