Draghi Calls for Bold Action

ECB President Draghi calls for bold action, but it is not clear exactly what he means. He does not mean a resumption of the sovereign bond purchase scheme. He does not mean granting the ESM a banking license. He does not mean boosting the funds available to the ESM. Bold action apparently does not mean accepting any more (net basis) state guaranteed bonds as collateral. Bold action is not opening up the creditor nations' purse strings without conditions or limits. 

Change, as we noted before, change comes in two forms:  bumps and grinds.  Weather and demographics are often associated with grinds; small nuanced changes over a protracted periods.  Bumps are faster and more pronounced changes over a short period, like 9/11 or the fall of the Berlin Wall. 

European officials seem to think that greater integration is a grind.  It is a long process that eventually culminates in a fuller monetary union, a banking union and a fiscal union.  It will take years to accomplish, with numerous summits and treaties.  Yet, perhaps what Draghi is thinking is that rather than a grind, greater integration needs to be a bump.  A big bang, if you will, or a jump into greater union.

It is not clear, though how we get to there from here.  Increasing the linkage between solvency and sovereignty seems to be a potentially promising path.