European Central Bank Chief Mario Draghi may follow the U.S. lead and fire off his own bazooka.

Requesting broader spending powers, Treasury Secretary Hank Paulson famously told Congress that he needed “a bazooka” to head off the financial crisis.

German magazine Der Spiegel reports that the ECB is now considering pledging unlimited bond purchases to limit the maximum yields on sovereign debt. Draghi is bringing new boldness to the ECB and may have an itchy trigger finger on the big bazooka.

The present stock market rally started in earnest after Draghi’s statement about future action: “It will be big enough.”

One of the big concerns has been if Germany will go along. Previously the Bundesbank president made statements that caused some to believe that Germany is not wholeheartedly behind Draghi. However, Angela Merkel, the German chancellor, last week clearly stated that her thinking was in line with the ECB as long as certain conditions were met.

If Spiegel’s report is correct, expect fireworks ahead.

The biggest beneficiaries will be Spain and Italy. Since July 24, 2012 bottom, the Spanish market is up about 25%, one of the best performances by any market in the world. Spanish 10 year bonds already slid to 6.44% last week, the level last seen in July 5, 2012. The Spanish ETF of interest is iShares MSCI Spain EWP; the Italian ETF of interest is iShares MSCI Italy EWI.

ECB probably can accomplish the task for about 100 billion euros by buying Spanish and Italian debt. Compared to the bloated balance sheet of the ECB, this is not a big number….Read more at MartketWatch