Why an Italian is Head of the ECB

Analysis: Merkel’s Italian ally at the ECB | Reuters.

This article claims that Merkel wanted a pragmatist over an ideologue as head of the ECB, which is why Axel Weber was passed over for the post. Draghi is an ideologue, too. While Weber is a sound money/anti-inflation ideologue, Draghi is just one of a different stripe. His ideology is the cult of the euro.

Merkel did not reluctantly support Draghi for the post; she wholeheartedly supported his candidacy, because he believes in the euro just like the rest of the European politicos. The euro is more than just a currency; it is a grand project that will supposedly eliminate wars on the continent by binding its members closer together.

Ideologies ignore facts. Increasing civil unrest in Spain and Greece show that the euro is in fact destabilizing the region, but blindness to the facts on the ground will keep SuperMario and the Merkel marching down the same path.

The costs associated with a eurozone breakup are enormous, particularly to Germany; hence, no matter what any politician says, the ECB will begin printing to bail out the southern countries. Once intervention starts, it takes on a life of its own. The ECB will not be able to stop a debt monetization program once its starts, so it will print to the inevitable crash.

Don’t be surprised if the ECB gets away with printing money for a very long time without consequences. The Swiss and Chinese have a big interest in keeping the euro priced exactly where it is. They have been stepping in to support the euro against their own currencies and will continue to do so right up until the crash.

 

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One thought on “Why an Italian is Head of the ECB

  1. What Merkel wants must surely reflect her ambition to be re-elected Chancellor of re-united Germany.
    One cannot equate domestic politics with calling the shots for all members of the EU. We have heard much about what Merkel wants and indeed does. Delay has either been her tactic or her weakness, and delay has brought this situation to where it is now. A belligerent attitude to Greece was never envisaged by the EU proponents. There are uncofortable echoes about German demands for many Eurofamily members.

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