Let us now assume that I am wrong and that Mr Rajoy and Mr Monti both blink in the next couple of weeks and apply for the OMT, subject to some externally set conditionality.
What will the ECB do when a newly elected Italian government takes office next year, and decides to tweak the reform process a little, as the Greeks have been doing recently?
Will the ECB really sanction Italy, risking its economic collapse and possibly a financial meltdown in Europe?
As the answers to this question are so obvious, there surely must be an incentive for electorates and their elected representatives to call Mr Draghi’s bluff, or at least to push him to the limit.
Wolfgang Münchau, Financial Times September 16, 2012
QE would be right for Europe, too - FT.com