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If Germany publicly disavows Draghi and the ECB on OMT, the resulting state of confusion and distrust will certainly send interest rates zooming up again for certain Eurozone countries' bonds.

So the problem is not whether Draghi has pulled a cheap trick (afaik the central banks of the US, the UK and Japan don't need to do massive bond purchases, the threat of intervention is sufficient), but whether the ECB is credibly independent, or whether it's Germany that in fact gives its orders to the central bank.

Plunging EZ bond markets into chaos again would almost certainly lead to an orderly or disorderly break-up of the euro. So it's down to what Germany wants in that regard.

Grillo seems to be building a Draghi strawman instead of talking about power.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Oct 28th, 2013 at 03:04:37 AM EST

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