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The Real Moral Hazard for the ECB - Cook`s Kitchen

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Update on the "ECB Prisoner's Dilemma" as of December 29...

Monti said on Thursday that the European bailout fund needs more resources and unless it is given the firepower to work properly, high-debt countries will be "in difficulty". But, Monti refused to quantify how much more the European bailout fund needed.

And he declined to comment on what the European Central Bank should do to tackle the financial crisis, saying that he was a supporter of central bank independence.

The fact Italian bond yields rose this month after falling from a record high in November wasn't due to the ECB's reduction in secondary market buying or to dissatisfaction with Italian policies, but because investors were disappointed with the results of the European Union summit, Monti said.

The current spread between Italian and German 10-year benchmark bonds, which was above 520 basis points on Thursday, had no economic justification, he added.

Germany Runs the Show, Still

Contagion vs. Credibility: ECB Prisoner's Dilemma

Kevin Cook is a Senior Stock Strategist withZacks.com

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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