Montreal, Canada

The Americans, British and Swiss have done it. But the European Central Bank (ECB) refuses to launch a bond buying program.

Increasingly, it looks highly probable that as the EUR loses support and continues to fall sharply the ECB will have to instill a measure of confidence across the weakest eurozone bond markets. Greece needs a buyer of last resort – a big buyer. And only the ECB has the monetary muscle to make a difference and quickly.

Quantitative Easing (QE), the central bank code word for printing money, gained momentum during the depths of the credit crisis in early 2009 as monetary policy grew ineffective against an onslaught of protracted market stress.

Basically, QE enables a central bank to conduct unorthodox monetary applications to defend a currency and absorb excess bond market liquidity. The immediate aim is to stabilize financial markets by keeping interest rates down and providing a massive dose of liquidity to the weakest segments of the government credit chain. That's exactly what the Fed did in 2009 as it purchased about 17% of all Treasury securities and initiated all sorts of emergency measures to protect the financial system's infrastructure. Luckily, it worked.

The British, unlike individual countries forming the eurozone, also printed wads of cash in 2009 to purchase gilts of British government bonds. I don't have exact numbers on what percentage the Bank of England purchased in 2009 but I imagine it was north of 25% to 35% of all gilts issued.

At this time, despite its huge economic challenges and rising debt burdens, the British are quite thrilled to be outside of the eurozone and able to print their own money.

But in Europe, the ECB is a bizarre central bank still fighting yesterday's war and reluctant to embark on QE.

The ECB is highly influenced by German monetary officials who cling to inflation fears – and at all costs. This is the same central bank that raised lending rates in early July 2008, just as the financial system was about to implode.

The Germans are an integral part of the how the ECB operates and remain adamant about destroying incipient inflation in the bud. Inflation, however, is nowhere to be seen in Europe. Wages are declining, incomes are stagnant and the most leveraged countries are still facing a housing deflation coupled by weak domestic consumption. Austerity might be needed in Greece to control spending but it's also a recipe for deflation.

Yet it now seems highly likely that the ECB will have to embark on some sort of quantitative easing and soon. Greek bonds need buyers. And right now there aren't too many takers because the markets believe that Greece won't do enough to cut spending and reduce its bloated deficits. Spain and Portugal are next on the firing line.

The endgame will ultimately be an inflationary quagmire for central banks and investors alike. That seems a few, if not several years away as the ongoing fallout from the 2007-2008 credit crisis spreads from the private sector to the public sector. The squeeze is on government balance sheets and their respective currencies. And gold remains the best haven for EUR-based investors – already up 17% in EUR terms in 2010.