Two big rumours about possible eurozone endgames everyone’s been buzzing about lately now look completely false.We can’t say we’re surprised.
First, any hopes for the European Central Bank to fund the European Financial Stability Facility went out the window this morning, with an EU official telling Dow Jones that this was out of the question.
Not that there was ever any doubt that this option is not currently on the table. An ECB legal opinion earlier this year pretty much ruled that out. That proposal wasn’t going to get any help from Germany, either.
Now, we’re hearing more bad news for a big plan to lever up the EFSF by providing first-loss guarantees to bondholders.
DJ also reported that EU lawyers have directly come out against this. Add that to comments yesterday about the initial rumour being “totally wrong” and these whispers are looking more and more like a schoolyard fib.
That said, a ton of rumours could come out of an informal meeting between French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Commission President Jose Manuel Barroso, European Council President Herman van Rompuy, outgoing ECB president Jean-Claude Trichet, and incoming ECB president Mario Draghi in Frankfurt today.