There is a sense of disbelief and denial out there. Some people cannot believe Draghi meant what he said. it would be too harsh, too wrong, etc. Personally I think he meant what he said. Europe, not just Germany, have an aversion to printing and a belief that austerity and time will work.
But what if it is part of some master plan to get everyone on board with treaty changes? I guess it could be, but you are now betting that not only didn’t he say what he meant, but that whatever cunning plan he is a part of, will actually succeed.
These are the same people who brought us EFSF and EFSF and more EFSF. These are the people who thought the IIF could deliver a “PSI” back in July and then again in October – heck it was 4am agreement with IIF that saved that summit. I would not bet that any plan to trick or push people into agreement will work. If anything, it may confirm their worst fears about losing sovereignty by agreeing to treaty changes. The heads of some of these countries may not be as powerful or important to the world as Merkozy, but at home they are important and used to being treated with respect. If his comments were meant to be part of some grand plan to force agreement, I would bet on it backfiring. More and more it seems like leaders of smaller but successful countries are only invited to sit at the kid’s table. Making important people feel small and manipulated is hardly ever a successful strategy.
Speaking of feeling manipulated, how many Italian politicians feel cheated today? Don’t you think they expected a little more from putting an unelected technocrat in charge? Hey, we put in charge a technocrat and all we got was this lousy T-shirt.
The market seems to remain too optimistic given the headlines out of Europe. Yes the jobless claims were okay, but a few thousand here or there is hardly statistically significant for the economy as a whole, especially considering seasonal adjustments and the “tendency” for the data to be adjusted higher.