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ECB Bond-Buying Program Could Hurt Europeans

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  • Description

    FBN's Ashley Webster weighs in on the ECB's rescue for the eurozone

  • Duration 3:43
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-- the president the European Central Bank giving a boost to the markets.

After of course announcing plans for a government bond buying program.

-- that man Ashley Webster joins us now from Frankfurt Germany with the details -- asked.

That that that.

Yeah hey Tracy I guess you could say the Mario Draghi the ECB president finally got that bazooka out saying.

Yes indeed we are announcing -- -- Ltd to bond buying program of one's a three year notes that he says.

-- effectively put in a backstop for the bond -- -- bring down those borrowing costs of countries such as Spain and Italy.

You know countries though must first request help when they must undergo some strict conditions.

Back approve a problem for our country like Spain -- may -- want people nosing around in May have books.

But the ECB hopes the IMF will also be a part of that process.

Whether it be -- high borrowing costs were in fact based on very real economic data and not as he stated.

Unfounded fears.

We shouldn't forget how these countries found themselves in -- -- that you -- to begin -- Mainly because of their wrong policies and policy mistakes.

So to this extent and the yields.

Are currently in the market reflected this fact.

They don't reflect on the -- founded fears of the possible reverse indeed be the also reflected the quality of the outstanding credit of these countries.

But Tracy critics say the consequences of this big bomb -- -- bond buying program.

Could didn't ultimately -- the very people of Europe.

Whenever the European Central Bank stocks buying bonds it will issue new money.

And as you know an increase in the money stock will soon or later translate into higher prices.

And higher prices mean a decline in the purchasing golf money.

It will also.

So I would say that would be great costs that come with the ECB's the government purchase program.

Those same critics also say that the ECB is overstepping its mandates.

And propping up eurozone governments.

I think -- the issue is pretty clear it is in violation of existing EU -- all what's happening now.

And -- of course the current inflation is relatively be no name.

But the -- the Central Bank stocks buying bonds issue new money.

You can be sure that -- -- later inflation will go up and and that would do these Tom -- facts.

While legal will not -- ECB is just going ahead with the program Tracy and mr.

Draghi says he is quite within his rights to do so although as we've heard.

There are others who say no that's not true.

Are the markets certainly loved -- so leaflets keeps going up by some 2% the -- -- the backs also gaining about 3% and the banks.

My MI they had a good -- some French -- today including Credit Agricole.

And Societe Generale -- seven and 8% -- certainly the market's love it but we have to point out that this does not solve the European.

Debt -- yes it brings down -- cost at least that is the hope that doesn't get to the very underlying problems about the countries.

It may have been to what trouble in the first place we'll talk more about that later.

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