ECB should end bond purchases soon, Stark says (Reuters)

FRANKFURT — The eurozone crisis is not over, France’s reforms are slipping and the Bundesbank has set aside billions in new provisions against what it sees as risky European Central Bank moves, Germany’s central bank said on Tuesday. Presenting Bundesbank 2012 results that showed a sharp increase in its risk provisions, the German central bank’s chief, Jens Weidmann, urged governments to tackle the roots of their troubles with reforms.

One year ago, the ECB faced with an imminent collapse of the house of peripheral cards literally made up a bazooka: one so big and loud the market had no choice but to assume Draghi and company were not joking and actually knew what they were doing - it was the Outright Monetary Transactions (OMT), the successor to the SMP program, which was unique in that it was open-ended and unlimited. It was literally, "the kitchen sink" conceived to put a halt to the relentless selling which last July sent peripheral bond yields to record wides by instilling the fear of god, or in this case hi

Even though the German constitutional court gave its blessing to ECB president Mario Draghi's OMT program, Concerns Mount that ECB Bond-Buying Program Is Illegal.

TODAY'S biggest news is the word that the European Central Bank is intervening in European debt markets in force, buying up Spanish- and Italian-government debt. The ECB spent last week expressing reluctance to take this step, but without it, the euro crisis threatened to spin irretrievably out of control. What are these purchases all about, and will they work?

A post on the the Fibs and Waves blog by "Blankfeind" outlines the actual legal case against the OST. I believe the case is rock solid. How the German constitutional court rules in two days is another matter.

By Robert Guttmann, Professor of Economics at Hofstra University and a visiting Professor at University of Paris, Nord. Cross posted from Triple Crisis