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Economy

Draghi To The Rescue? New Bond-Buying Plan Unveiled To Help Boost Euro

LES ECHOS (France), DIE WELT, DER SPIEGEL (Germany), IL SOLE 24 ORE (Italy) BLOOMBERG (US), BBC NEWS (UK)

Worldcrunch

FRANKFURT – Aiming to squelch speculation of an impending demise of the euro, European Central Bank President Mario Draghi said policymakers have agreed to an unlimited bond-purchase program to regain control of interest rates in the single currency zone, reports Bloomberg.

The program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi said during Thursday afternoon's widely anticipated press conference in Frankfurt.

The ECB will target government bonds with maturities of one to three years, including longer-dated debt that has a residual maturity of that length, said Draghi, calling the euro "irreversible."

Ahead of the announcement, the European Central Bank kept the benchmark euro zone interest rate unchanged at a record low 0.75%, as expected by most observers.

Italian Prime Minister Mario Monti said Thursday that the stakes are higher than ever, and called on politicians on the national level across the continent to stop blaming the crisis on demands that Europe is making, Milan-based business daily Il Sole 24 Ore.

“Rather than the ultimate fulfillment of (Europe’s) union of peoples, the euro paradoxically could become a major factor of its disintegration,” Monti said in a speech in Florence. “This would be even more harmful than the material consequences of the crisis. If we don’t increase the political and psychological vigilance, this will happen.”

However, Germany remains critical of the ECB. According a poll carried out by Der Spiegel, 42% of German citizens have little or no confidence in Draghi, while only 18% of Germans say they trust the current ECB President.

The German stock index (DAX) barely reacted to the news, reports Die Welt.

In the afternoon, the German index was still 1.30 percent higher at 7,055 points, but held up to the acclaimed 7000-point mark.

The ECB announced earlier today that it forecasts a deeper economic contraction for 2012. Euro-zone GDP will drop 0.4 percent this year instead of 0.1 percent, it said.

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Ideas

A Writer's Advice For How To Read The Words Of Politics

Colombia's reformist president has promised to tackle endemic violence, economic exclusion, pollution and corruption in the country. So what's new with a politician's promises?

Image of Colombian President Gustavo Petro speaking during a press conference in Buenos Aires on Jan 14, 2023

Colombian President Gustavo Petro, speaks during a press conference in the Community of Latin American and Caribbean States (CELAC) Summit in Buenos Aires, Argentina, on January 24, 2023.

Manuel Cortina/ZUMA
Héctor Abad Faciolince

-Essay-

BOGOTÁ — Don't concentrate on his words, I was once advised, but look at what he's doing. I heard the words so long ago I cannot recall who said them. The point is, what's the use of a husband who vows never to beat his wife in January and leaves her with a bruised face in February?

Words are a strange thing, and in literal terms, we must distrust their meaning. As I never hit anyone, I have never declared that I wouldn't. It never occurred to me to say it. Strangely, there is more power and truth in a simple declaration like "I love her" than in the more emphatic "I love her so much." A verbal addition here just shrinks the "sense" of love.

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