Money for nothing, not for thee

Continuing the policy of his predecessor Jean-Claude Trichet--talking out of both sides of his mouth-- newly installed European Central Bank President Mario Draghi told Frankfurt's European Banking Congress that the ECB cannot buy any more sovereign debt beyond what it is already doing. 

It already is holding EU187 billion in sovereign debt and has been buying Italian debt. 

He called on the Eurogroup of Eurozone finance ministers to activate its proposals for expanding the European Financial Stability Facility.

Both British Prime Minister David Cameron and now Spanish Popular Party leader and would-be Prime Minister, after tomorrow's elections, declared, "There is only one solution and that is that the ECB once and for all, does what it is suppose to do," i.e., buy sovereign debt. Spanish ten-year bond rates hit 6.76%, higher than Italy's 6.67%.

Nonetheless Draghi hinted that when it comes to the banks, he will come to the rescue. 

London's {Financial Times} reports that one idea being discussed is offering the banks two- to three-year liquidity and looser requirements on the collateral banks have to provide for borrowing from the ECB.