by Calculated Risk on 9/05/2012 11:46:00 AM

Thursday is Draghi day (ECB meeting) and the following might seem like a contradiction ...

From Bloomberg: Merkel Said to Tell Lawmakers She Backs Draghi and Weidmann

Chancellor Angela Merkel told lawmakers in Berlin today that she supports both European Central Bank chief Mario Draghi and Bundesbank President Jens Weidmann ... both Draghi and Weidmann are carrying out their respective mandates ... she therefore sees no contradition in supporting them both ...

From the Financial Times: Mood improves on hopes for ECB action

The ECB is expected to outline how it may help reduce the borrowing costs of heavily indebted countries in the eurozone – leaks from the ECB reported by news agencies on Wednesday seem to confirm the plan is afoot ...
Excerpt with permission

More from Bloomberg: ECB Plan Said to Pledge Unlimited, Sterilized Bond-Buying

Under the blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields ... The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.

The history of the European crisis has been for policymakers to over promise and under deliver, but the consensus is Draghi will announce some buying of short term bonds.