ECB update: Sueddeutscher Zeitung, Munich reports Draghi will seek a two tier mandate to support Italian and Spanish bonds. He is trying to engineer both restarting the SMP and further expanding intervention by using the ESM when, or if, it goes live post the German Constitutional Ruling on September 12th.

Here is the Reuters link to the story: http://uk.reuters.com/article/2012/08/01/uk-eurozone-ecb-draghi-idUKBRE8701P820120801

IF - Draghi goes ahead and force a full ECB board vote on this, clearly the Germans will refuse. Draghi can still secure his win, but if this is against the will of Bundesbank, it will be a hollow victory. Bundesbank is not only the biggest shareholder, but also the dominant acting central bank inside the system. Add to this the massive imbalances in Target-2 and we have a nightmare.

We should never underestimate the will and need for central bankers like Draghi to look powerful, but his Royal Flush is looking weaker.......if doing it this way.