Joe Weisenthal points out something I’ve been noticing ever since the European Central Bank announced its bond-buying program. It turns out this worked far too well for the ECB’s taste. They wanted to use the prospect of bond-buying as a spur to get Spain and perhaps Italy to agree to a strings-attached bailout, so they could insert themselves into the fiscal policies of those countries. But the expectation that increased sovereign debt bond yields would lead to a request for a bailout and a mass ECB purchase have instead led to depressed sovereign debt bond yields. The Spanish 10-year, for example, has remained within a steady, narrow range since the announcement in September. These levels aren’t perfect, but they are the lowest sustained level since the last actual bond-purchasing program from the ECB earlier in the year. In other words, the prospect of the ECB buying bonds is keeping the yields down at relatively the same level as actual bond-buying.

This is the opposite of what the ECB wanted. They wanted then, and still want now, to use their leverage to force changes in Spain and Italy. The implicit backstop, however, gives Spain the space they need to reject a bailout. Add to that the powerful political rationale for such rejection, and Spain just might hold off.

Throw into the mix the newly energized movement against austerity measures in the southern states of Europe, in Spain, Greece and now Portugal. This leads to governments, wary of being tossed out of power for promoting austerity, wary of inflicting more suffering on their citizens. Just this weekend, voters in Lithuania took out the austerity party in favor of a new leftist government. That prospect weighs heavily on the southern European governments.

And then you have the academic analysis showing that austerity does more harm than good, recently presented by the IMF. Leaders promoting austerity as a way to promote economic confidence and spur a recovery look increasingly out of touch, and now the intellectual underpinnings for their theories are being cut out from under them.

All of this is to say that the best-laid plans of the European Central Bank, and leaders in Europe like Germany, may be going awry. The bond-buying threat has been enough to depress the debt crisis, anti-austerity movements have spooked the southern governments, and even the IMF has acknowledged the harmmful aspects of cutting back on fiscal policy. We still have a recession in Europe, and plenty of turmoil to navigate. But the people may not have to bear the full burden for the mistakes of elites.

David Dayen

David Dayen