Bill Mitchell – A leopard never changes its spots–Jens Weidmann, ECB President aspirant

Various people are vying for the key positions in the European structures (EC President, ECB head, and a range of other positions) at the moment. The presence of French and German interests typically dominate these outcomes, although as a result of the Treaty of Lisbon changes, more weight was given to the jockeying of the various political coalitions that find their way into the European Parliament. But that process has new been compromised by the decline of the traditional parties as other political forces (Greens, En Marche, Liberal Democrats etc) have gained ground. So Europe is back to its Franco-German rivalry and emerging out of that process is the unthinkable – Bundesbank President, Jens Weidmann – becoming a front-runner to take over the ECB role. He is a man with a past and his current ‘political’ statements, as he lobbies for the position he clearly covets, appear to contradict that past. A leopard never changes its spots. Beware....

Bill Mitchell – billy blog
A leopard never changes its spots – Jens Weidmann, ECB President aspirant
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Spiegel International — Mario Bothers: Germany Takes Aim at the European Central Bank

There was a time when the German chancellor and the head of the European Central Bank had nice things to say about each other. Mario Draghi spoke of a "good working relationship," while Angela Merkel noted "broad agreement." Draghi, said Merkel, is extremely supportive "when it comes to European competitiveness."

These days, though, meetings between the two most powerful politicians in the euro zone are often no different than their face-to-face at the most recent summit in Brussels. She observed that his forced policy of cheap money is endangering the business model of Germany's Sparkassen savings banks and retirement insurance companies. He snarled back that the sectors would simply have to adapt, just as the American financial sector has.

The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans "may not believe in God, but they believe in the Bundesbank," as Germany's central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of "parallel universes."

ECB head Draghi doesn't understand why he is getting so much resistance from the country that has profited from the euro more than any other. Yet Germans blame Draghi for miniscule yields on savings accounts and life/retirement insurance policies. Frustration is growing.…

Spiegel International
Mario Bothers: Germany Takes Aim at the European Central Bank
Martin Hesse, Ralf Neukirch, René Pfister, Christian Reiermann and Michael Sauga

Peter Dorman — Jens Weidmann on Central Banks as Lenders of Last Resort (Not)

Frankly, I think Weidmann should sue the reporter who put these words into his mouth—obviously a crude attempt to make him sound like a yahoo who doesn’t know the first thing about his line of work.

Department of "WTF?"

Econospeak
Jens Weidmann on Central Banks as Lenders of Last Resort (Not)

Peter Dorman | Professor of Political Economy, The Evergreen State College

Jens Weidmann, boss of the Bundesbank, wants the opposite of debt relief for Greece. Really.

Jens Weidmann, boss of the Bundesbank, wants to restrict the power of the Greek central bank to provide Emergency Liquidity Assitance (ELA) to the Greek banks as he is afraid that Greek banks will use these reserves to purchase short-term government debt....

True colors. The black flag of piracy. Restrict liquidity to force insolvency. This is the opposite of what modern central banking is designed for.

Real-World Economics Review Blog
Jens Weidmann, boss of the Bundesbank, wants the opposite of debt relief for Greece. Really.
Merijn Knibbe

Patrick Graham — ECB’s Weidmann says euro zone not in deflationary cycle

You know what that means.

Across the Curve
ECB’s Weidmann says euro zone not in deflationary cycle
Patrick Graham

See also ABCNews, Spain Falls Into Deflation, Upping Pressure on ECB

Marshall Auerback — Negative Interest Rates Is Fiscal Austerity By Another Name

The European Central Bank has started to debate the idea of negative deposit rates, as a means of slowing inflows into the currency and curb the euro’s strength. Interestingly enough, after appearing to oppose the idea a few months ago, Bundesbank chief Jens Weidman now says that a negative deposit rate could be a way to address the impact of a strengthening currency....

The impact such a step would have to improve bank lending to companies and households was, however, “debatable”, he said.
Well it won’t improve bank lending for the simple reason that he’s got the causation wrong: loans create deposits, not the other way around....

More to the point, negative interest rates on deposits penalize savers. 

Macrobits

Negative Interest Rates Is Fiscal Austerity By Another Name
Marshall Auerback

Interview with Jens Weidmann, President of the Deutsche Bundesbank

Why the euro is doomed, or else Europe will implode politically. Yep, it's the  inflation-phobic Germans.

Zero Hedge

German Central Bank Warns Of "Incendiary" Monetary Policy

Interview with Jens Weidmann, President of the Deutsche Bundesbank

Two post on developing currency wars.

Now Mr Weidmann would like to see austerity policies in all deficit countries as the preferred tool of adjustment. However, this adjustment has caused mass unemployment in the European deficit countries and falling GDP with no light at the end of the tunnel so far. This, I believe, is the background of the conflict in the ECB. Some, like Mr Weidmann, are calling for internal devaluation policies, while others, like Mr Constâncio, are more open to other ways of economic adjustment.

By the way: there is a clear distributional effect of this choice. Adjustment by austerity leaves capital owners in surplus countries unharmed (at least it seems so to people who do not understand theparadox of thrift) while it hurts workers in the deficit countries. Adjustment by exchange rate changes leaves nominal wages untouched, but some capital owners in the surplus country lose because their investments in the deficit country are now worth less in domestic currency. However, while there is proof that the second avenue works the first – austerity – is without theory. There is no theory of expansionary austerity – it is all wishful thinking.

The crux of it:

When the euro system was introduced, many feared that some people in the ECB would think along national lines only, favoring policies that benefit only their country. It seems that this situation has now arrived.

econoblog101
Austerity for all?
Dirk Ehnts | Berlin School for Economics and Law in Berlin

There is much hype about “currency wars” in the international media this week, reaching the heights of the Davos gathering. The excitement seems to have been started by Bundesbank president Jens Weidmann, who earlier this week aired his concerns about an apparent politicization of exchange rates owing to an erosion of central bank independence and rising political pressures for more aggressive monetary policies.

Multiplier Effect
Are Currency Warriors' Gloves Coming Off?
Jörg Bibow

Zero Hedge — Jens Weidmann; Speech at the 18th colloquium of the Institute for Bank-Historical Research (IBF) in Frankfurt

Jens Weidmann; Speech at the 18th colloquium of the Institute for Bank-Historical Research (IBF) in Frankfurt

The caption for today’s event is “Paper money – Public finances – Inflation.  Did Goethe hit upon a core problem of monetary policy?

Zero Hedge

ECB's Weidmann On Gold: "Money Is A Social Convention

Submitted by Tyler Durden