This chart from Spiegel shows you that the ECB has been buying a lot of periphery bonds (hat tip Global macro Monitor). But, no matter how much they have bought, their purchases are dwarfed by the absolute magnitude of bonds coming due next year in Italy, over 300 billion euros worth.
Clearly making a credible commitment to unlimited purchases, so called ‘rate-easing’, is going to be a lot less expensive than this – except politically, where it enjoys no support in Germany.
Remember that when discussing QE3 in June I wrote:
My understanding about what [Bill] Gross believes is that the Fed could see QE3 "guaranteeing" a 2 year or 3 year yield at a certain level—say 50 basis points. Moreover, the Fed would not necessarily have to buy any Treasuries to defend this target. Gross understands that the private sector “would do it” for the Fed via the language and confidence in the "guarantee".
When QE3 was a go with the Fed explicitly committing to zero rates for two years, what I call permanent zero, the Fed didn’t have to buy any bonds. The private sector did it for them. Given the size of the Italian market, that’s where the ECB is headed, German political concerns or not. This chart tells you why.
Source: Der Spiegel