Moody’s: “The ECB Can Do No More Than Buy Time.”
The rating agency has been one of the strongest ECB’s critics lately. With Swiss, Dutch, Finnish, and German short-dated bonds once again hitting new record low (and Italian 10Y is weakening), Moody’s remarks are not illogical.
At the time when Mario Draghi, the President of the European Central Bank (ECB), said that “within [its] mandate, the ECB is ready to do whatever it takes to preserve the euro,” Spain’s 10-year government bond yields back below 7%.
Additionally, his statement is very general and doesn’t provide any specific solutions to the large Euro debt crisis.
Moody’s believes that the E.U. can’t do nothing more than to buy time. All can’t be done by Brussels to resolve the debt crisis. Resolution will ultimately rest on achievement of fundamental changes to member states’ budgetary positions and debt stocks, on structural economic changes required to stimulate economic growth.