Markets had a bit of a spasm when Jean-Claude Trichet made his big announcement today, but after diving hard the euro recovered, and spreads are coming in massively for PIIGS debt, because word is that despite the lack of a bazooka announcement, the ECB is in there buying bonds right now.
The point is this: The ECB doesn’t have to announce a new bazooka to use a bazooka.
And actually that’s the scariest fact for the bears, because every single time the ECB or the European governments have announced something, the bluff has been called almost instantly. But if there’s no grand announcement, there’s actually nothing to be called.
Now, we’ll see how long this lasts, but this seems like a positive development in the meantime.
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