Euro Debt Rescue Plan Buoys Markets

Euro Debt Rescue Plan Buoys Markets.

A new bond buying plan that is targeted at easing the eurozone debt crisis has been announced by the president of the European Centeral Bank (ECB) Mario Draghi.

This bond buying plan is hopefully going to cut the borrowing cost of the eurozone countries in debt by buying their bonds.  After this announcement was made the ECB has kept the interest rate at 0.75%.

Our view
This does not solve the problem, it just means it is easier for countries to borrow more at slightly lower rates.  In short, it is a devaluation of the Euro and we can expect nothing more than long term inflation in Europe.  Greece is perhaps more secure now but more importantly if Spain and Italy come to the table to keep borrowing, the Euro will just not cope.  This has not solved the Euro problem, merely postponed it.