STOCK MARKET WATCH -- Black Friday, 23 November 2012

[Demeter]

8. Carthaginian terms for Italy and Spain threaten Draghi bond plan

THE EUROMESS...THE GIFT THAT KEEPS ON GIVING

http://www.telegraph.co.uk/finance/comment/9531764/Carthaginian-terms-for-Italy-and-Spain-threaten-Draghi-bond-plan.html

Nothing can happen until Spain and then Italy request a rescue from the EU bail-out funds (EFSF/ESM), and sign away their sovereignty. Nothing further can happen until an angry Bundestag approves the terms and signs away its money.

Germany has a 27pc voting weight and can veto any rescue.

Even less can happen if the German constitutional court issues a preliminary ruling on Wednesday blocking activation of the €500bn ESM fund. Morgan Stanley's team – mostly Germans as in happens – put a 40pc likelihood on this happening.

This is not to belittle the ECB plan for "unlimited" bond purchases. The Jesuit-trained Mario Draghi has pulled off a masterstroke, securing the assent of every northern ECB governor except the Bundesbank's Jens Weidmann, and crucially the assent of Germany's board member Jorg Asmussen, and indeed Chancellor Angela Merkel herself.

Italy's premier Mario Monti – a fellow `Jesuit' – more or less confessed that this minor revolution could not have happened without the defeat of French leader Nicolas Sarkozy in May. The election upset broke the Franco-German axis and reordered the strategic landscape of Europe...

A COMPREHENSIVE BEHIND-THE-SCENES LOOK, LENGTHY AND WORTH READING