ECB —This Time, This Time The Gift Comes With Real Reforms….. Again.

 

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ECB’s Asmussen: IMF must be involved in conditions for new bond buys

 

The European Central Bank should buy sovereign bonds of troubled euro zone states only if the International Monetary Fund is involved in setting the economic reform programs that should be a condition for the intervention, a top ECB policymaker said.

European Central Bank board member Joerg Asmussen said on Thursday the euro zone’s bailout funds should be used to intervene on the primary bond markets of countries that request aid before the bank acts. This aid would be conditional on extensive economic reforms.

“From my point of view this means that the IMF will be involved in setting the economic adjustment programs because the IMF of course has unique know-how and has high leverage as an external policeman in these cases,” Asmussen said.

Yep, they sure do! 

Asmussen, one of the six-member ECB Executive Board, has already said he wants the ECB only to buy bonds with short-dated maturities and the problem of the ECB being perceived as a “preferred creditor” needed to be addressed.

He also said the new program should learn from the last one last year. It was hurt then by the experience of buying Italian and Spanish bonds, only for Italy’s then-prime minister, Silvio Berlusconi, to go back on the reform promises he had made to get the ECB to step in just days after he made the commitment.

German Chancellor Angela Merkel has signaled her backing for his strategy despite warnings from Bundesbank chief Jens Weidmann that to do so would risk letting indebted euro zone governments off the hook for the austerity measures and reforms they need to implement.

In a related note……..

Italy workers protest planned Alcoa plant closure

Workers from a threatened Alcoa Inc <AA.N> aluminum plant in Sardinia staged a loud protest in Rome on Thursday to pressure the Italian government to intervene to keep the factory open.

“We want to live with dignity,” said worker Renato Cocco. “We want to work and earn our living for ourselves, for our children and for our families.”

U.S.-based Alcoa plans to close the loss-making factory by November unless a buyer is found. The only interested suitor, German hedge fund Aurelius, pulled out of talks with the government earlier this month.

Closure of the plant, a major employer on Sardinia, would be a heavy blow for the island, risking hundreds of jobs in a region already beset by high unemployment and a sluggish economy.

Seventy kilometers south of the factory, miners have barricaded themselves in the Carbosulcis coal mine, which is also threatened with closure with the potential loss of about 500 jobs.

Yes, seems like Italy has returned to normal business practices.  Spend at will!!!  Well, save a little bit this time….

World food prices jumped 10 percent in July: World Bank

U.S. soybean futures hit a record high of $17.78 per bushel in trading on Thursday, while corn futures remained near the record of $8.49 set earlier this month.

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