Europe Still Doesn't Get It.

An excerpt from a recent wsj.com article.

New ECB President Mario Draghi said last week that the bank won't act as a lender of last resort to euro-zone governments, affirming the bank's stance that its mandate under the European Union treaty is limited to fighting inflation.

Europe still doesn't get it.  Greece is small potatoes.  Italy, on the other hand, is not.

In a nutshell:

1. Investors are no longer interested in buying Italian bonds as evidenced by the rising interest rates on these bonds (rates would be much higher if the ECB had not bought many of these bonds).
2. EFSF is nowhere near big enough to backstop Italy.
3. The biggest shareholders in the IMF (US) refuse to bailout another country.

At this point the ECB needs to throw out its ill planned mantra of price stability only and assume the additional role of lender of last resort before the EU goes down the crapper and takes the rest of the world economy with it.

The irony of this is that the fear of a replay of the unrest that the Germans remember during the 30's may end up being the downfall of their great European experiment.  It is this fear of inflation which could introduce a new round of chaos in Europe this time due to economic depression and collapse.