Professor Willem Buiter, Citigroup’s chief economist, said the apparent ECB action was pointless. “The warped logic of intervening in two countries that don’t need it is as strange as it gets.”
Mr Buiter said Europe risks a disastrous chain of events and the worst financial collapse since the onset of the Great Depression unless Europe’s central bank steps in with sufficient muscle to back-stop the system.
“The ECB has yet so show it understands that it is the only institution that can save Italy and Spain from fundamentally unwarranted defaults. Everybody is afraid and real money investors are dumping their holdings. The ECB must step in to cap the yields at 6pc or 6.5pc and put a floor under the market,” he said.