The European Central Bank has fired its magic bullet. By promising “unlimited” purchases of sovereign bonds, Mario Draghi, the ECB’s president, may have kept his pledge to do “whatever it takes” to save the euro. But in rescuing the currency, Mr Draghi’s magic bullet has badly wounded something even more important – democracy in Europe.The Financial Times | Columnists
Democracy loses in struggle to save euro
Gideon Rachman
2 comments:
German taxpayers on the hook for ECB monetary operations? If I hear it again I'm going to cry. The Greek or Spanish or Irish taxpayer are not? With the swipe of a key, the ECB exchanges an interest bearing euro claim, for a non-interest bearing euro. No German tax payer involved and no one is getting hooked, German or otherwise. This is what every central bank is charged with doing: Setting rates.
Rachman portrays Draghi as an anti-democratic unelected leader, which he is. But he is also the first leader of the ECB that showed any commitment to setting sovereign rates within the EMU. The politicians have acted befuddled and scared to challenge the German/Austrian economic solution of market forces and invisible spanking hands while Draghi has not and has actually prodded the parliaments to make progress in fixing the flawed treaties that created the EMU. The real tyrant in this debacle is the voter that selects inept politicians who deliver brilliant rhetoric while remaining committed to austerity and no reform.
Ryan,
They are switching from the EU setup: Greeks borrow money from the Germans to the US setup: the South *receives* money from the North(East) as net federal money transfers. So yes, Germans are not lending any more, they are giving presents. In the US people are fine with this, Germans are not. This decision has been made for them.
Maybe it will change their attitude to exports: it shows that being net exporter makes zero economic sense. Now they will send the goods AND the money South. Brilliant. Maybe they will choose to work less or consume more.
Post a Comment