Wed Nov 23rd, 2011 at 06:26:27 AM EST
Two weeks ago
EUROPEAN Central Bank council member Jens Weidmann said the ECB cannot bail out governments by printing money.
"One of the severest forms of monetary policy being roped in for fiscal purposes is monetary financing, in colloquial terms also known as the financing of public debt via the money printing press," Weidmann, who heads Germany’s Bundesbank, said in a speech in Berlin yesterday.
The prohibition of monetary financing in the euro area "is one of the most important achievements in central banking" and "specifically for Germany, it is also a key lesson from the experience of hyperinflation after World War I," he said.
Today: German 10-year bond auction a 'disaster'
One of Germany's worst bond sales since the launch of the euro prompted concerns the debt crisis was even beginning to threaten Berlin on Wednesday, with the Bundesbank forced to buy large amounts of the bonds to ensure the auction did not fail.
The low yields offered on the 10-year paper deterred investors from the auction, especially because of growing concerns over the cost to Germany of the escalating crisis.
That meant the central bank had to pick up 39 percent of the 6 billion euros of debt Germany had hoped to sell to investors after banks bought just 3.644 billion euros of the issue.
Again congratulations are due