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Yields on benchmark government bonds across Europe headed lower Friday -- exactly what the European Central Bank was looking for a day after announcing a bond-buying plan. Investors voted quickly on the ECB plan that split a few differences down the middle with the bank's offer to buy short-term bonds from eurozone countries struggling to climb out of debt.
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Equities across Europe and on Wall Street surged on the news. Yields for benchmark bonds in Spain, Italy, Austria, Denmark, France and Germany went down.
Ten-year bonds issued in Madrid that flirted with 7 percent yields in recent months dropped to 5.73 percent and yields on Italian benchmark bonds reached 5.13 percent. In Germany, borrowing costs on 10-year notes dropped to 1.56 percent. In France, they reached 2.21 percent. In the United States, 1.71 percent.
At 1-day-old, the bond-buying program announced by ECB President Mario Draghi was a roaring success.
Many analysts have concluded the central bank of the eurozone is the only institution that has the power and the agility to back its pledge to keep the euro from unraveling. The European Stability Mechanism, grand as it is, required agreement among 17 nations and ratification in 17 national capitals. Adding one euro to the fund or tweaking an inconvenient rule takes an act of international willpower.
The ECB chose to target short-term notes, if and when it actually puts its bond-buying program into action. Germany, which has opposed the strategy all along, might find small comfort in knowing that the ECB is only making a two- or three-year commitment.
The ECB chose to help countries that first request help from the European Stability Mechanism. In that manner, the bank is asking countries to play by the rules established by the euro collective. The ECB is not circumventing the fiscal discipline that is required of countries applying for international loans.
So, while some were looking at dropping yields Friday, others were asking Spanish Prime Minister Mariano Rajoy and Italian Prime Minister Mario Monti when they plan to ask for help.
The answer from each is an awkward one. Maybe never, if they can help it.
What a novel plan the ECB's bond-buying turns out to be. It's not help -- at least not yet. For now, it's only a threat to help.
For all that, look at Greece. Nearly $200 billion in international loans meant to help Athens get out of debt have been no help whatsoever. The government is still losing ground and the economy has been ransacked. Tax revenue, it appears, is the all but forgotten side of the equation.
But there's another possible outcome to the ECB's so-called "Outright Monetary Transactions," The Wall Street Journal said, and that is that Rajoy can simply ride this one out. Borrowing costs for Madrid just went down and he didn't have to trim Spain's deficit by one euro to get it done.
Sigmund Freud said the thing human beings do best is avoid pain. That is doubly true for politicians. In that sense, Spain snubbing the international community by refusing to apply for help is not what anyone would call a healthy outcome to the sovereign debt mess.
It turns out, nothing getting done can only help temporarily.
In international markets Friday, the Nikkei 225 index in Japan added 2.2 percent and the Shanghai composite index in China surged 3.7 percent. The Hang Seng index in Hong Kong jumped 3.09 percent and while the Sensex in India climbed 1.95 percent.
The S&P/ASX 200 in Australia added 0.3 percent.
In midday trading in Europe, the FTSE 100 index in Britain gained 0.31 percent while the DAX 30 in Germany rose 0.96 percent. The CAC 40 in France rose 1.19 percent and the Stoxx Europe 600 gained 0.45 percent.
