Good News! The €uro is saved!

King Lear

Or maybe not.

There is surely no sadder, more pathetic moment in the whole of Shakespeare (and thus in the whole of literature) than when King Lear, in the throes of despair and betrayal, makes one last, desperate threat.  “I will do such things — what they are yet I know not — but they shall be the terrors of the earth!”

His intended threat was no more than an abject admission of helplessness and failure.  And so it is with ECB President Mario Draghi.  CNN reports that he “raised hopes Thursday for a more aggressive and unconventional intervention in European financial markets”.  It quoted him saying “The ECB is ready to do what it takes”.  But like Lear, what they are he knows not, or if he thinks he knows, he’s not saying.

Perhaps astonishingly, the markets, desperate for any hint of good news, advanced on receiving this gnomic announcement, and of course the commentators are already busy discussing what the ECB’s action might be.  Maybe he’ll grant a bank licence to the European Stability Mechanism (ESM), which would allow it to leverage its funds by borrowing.  But just now, no one is likely to lend to Europe on acceptable terms — except the ECB itself.  So if the ECB prints money and lends it to the ESM, and the ESM buys eurozone sovereign bonds to bring down the Club Med borrowing costs, that’s just Quantitative Easing by another name.

It’s also inflationary, and will disturb the nightmares of Weimar in Germany’s cellar.  And it implies debt pooling, with Germany becoming the ultimate guarantor.  Draghi may find that the Bundestag, and the German Constitutional Court, and German voters, may want to take a view on that.

The truth is, he’s whistling in the wind, and the markets will soon see that.  Only major, long-term fiscal transfers can save the €uro, and Germany won’t play that game.  The political consensus behind the €uro is falling apart.  Southern voters can take no more austerity, while Northern voters have bail-out fatigue.

EU leaders should stop pursuing their failing and irredeemable dream of Monetary Union, and realise that the only practical solution is to break up the currency.  It’s become a bankruptcy machine.

We can say of the €uro, as Kent says of Lear at the end of the play, “Oh let him pass!  He hates him, that would upon the rack of this tough world stretch him out longer”.

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8 Responses to Good News! The €uro is saved!

  1. Nothing cannot be sorted out. Nothing. We got over the second and first world wars and then the cold war for heaven’s sake! We all saw what had to be done and we did it together.

    Now a new menace threatens us all in Europe. It is bankruptcy. Well, we have been there before so it is nothing new. In a way it is our normal state of life. Europe has for centuries been at the back end of the Islamic Empire (Baghdad), well away from the heart of the Chinese and Indian civilisations.

    But what makes threats worse is if you do not recognise them, if you lie deliberately and if you conceal the facts. So here is a starter:
    1. What precisely is the state of the European banks?
    2. Why is so very much of our manufacture done in China?
    3. What is going on in Berlaymont? And what decisions are being made over our heads?

    Alcoholics anonymous invented the confessional way of cure through perfect realisation of our weaknesses. It is time our masters learned that lesson.

  2. Mike Spilligan says:

    I check the “markets” only to have a wry laugh. I suspect the people influencing the trend are either very young men who believe every tit-bit of news fed to them and who haven’t acquired the necessary thinking processes, nor the required cynicism that should go along with those; or they are older and wiser using their knowledge to buy and sell to their own advantage.

  3. Wilfred Aspinall says:

    Mario Draghi – I understand – went on to add “and save the euro” a sort of dramatic statement, as you say, that clearly demonstrates that his rhetoric is not backed up by a strategy that can be described as sustainable. If the ECB had a Strategy why have they not come forward with it months ago and have saved the euro already.

    Fiscal transfer can be undertaken but only if there is fiscal union and that means political union too. A European state yet run by an unelected elite. Draghi could however suggest to the political elite in the euro zone that instead of just the countries such as Greece, Portugal, Ireland – now Spain and in question Italy being forced out of the euro, devalue their new currency and become competitive that the whole eurozone devalues the euro currency. This would not solve the long term euro crisis but it might assist the above mentioned countries in the immediate future.

    To do that Germany would have to accept a drastic pill and see their finance strategy in a negative position and their exports not worth the value they were. Pensions would also be affected which would create considerable concern to the ordinary German citizen. A spiral effect if at the same time fiscal transfer is being undertaken.

    There is no saving the euro as it is currently designed – time for a rethink by the EU political elite sitting in Brussels. They say if it is not broke don’t try and fix it but when it is really broke throw it away. I know it means an about face but Draghi should be thinking wider than just saving the euro.

    Mind you nothing will even be contemplated until after the summer because everybody in Brussels and Frankfurt are on holiday.

    Wilfred Aspinall

  4. Mike Spilligan says:

    …. and another thing: Could it be that Draghi, Merkel and Lagarde are now fully involved in synchronised lying so that the other members of the gang have a couple of months to fiddle the figures and make a rose-scented escape?

  5. Merkel just went on holiday or there would be a counterstrike to his remarks by now. He’s taken advantage of her being “incommunicado”. It’s actually quite cowardly and if I were her, I’d be furious.

  6. Lt. Columbo says:

    …….. “Just one more thing”

    Quoth Mr. Helmer : “that’s just Quantitative Easing by another name”

    Sayeth I : Quantitative Easing is just Fraud by another name. Lending money to another entiy which you also control, and thus creating a bogus debt, which on the strength of that debt, one then generates additional promisory notes, in the way of fractional reserve lending based upon an artificially created “debt”, is wholly disingenuous and a perversion of banking rules.

    This is a case for Europol, is it not ?


    Gospel according to Matthew, Ch23, V14-28 – King James Version :

    14 Woe unto you, scribes and Pharisees, hypocrites! for ye devour widows’ houses, and for a pretence make long prayer: therefore ye shall receive the greater damnation.

    15 Woe unto you, scribes and Pharisees, hypocrites! for ye compass sea and land to make one proselyte, and when he is made, ye make him twofold more the child of hell than yourselves.

    16 Woe unto you, ye blind guides, which say, Whosoever shall swear by the temple, it is nothing; but whosoever shall swear by the gold of the temple, he is a debtor!

    17 Ye fools and blind: for whether is greater, the gold, or the temple that sanctifieth the gold?

    18 And, Whosoever shall swear by the altar, it is nothing; but whosoever sweareth by the gift that is upon it, he is guilty.

    19 Ye fools and blind: for whether is greater, the gift, or the altar that sanctifieth the gift?

    20 Whoso therefore shall swear by the altar, sweareth by it, and by all things thereon.

    21 And whoso shall swear by the temple, sweareth by it, and by him that dwelleth therein.

    22 And he that shall swear by heaven, sweareth by the throne of God, and by him that sitteth thereon.

    23 Woe unto you, scribes and Pharisees, hypocrites! for ye pay tithe of mint and anise and cummin, and have omitted the weightier matters of the law, judgment, mercy, and faith: these ought ye to have done, and not to leave the other undone.

    24 Ye blind guides, which strain at a gnat, and swallow a camel.

    25 Woe unto you, scribes and Pharisees, hypocrites! for ye make clean the outside of the cup and of the platter, but within they are full of extortion and excess.

    26 Thou blind Pharisee, cleanse first that which is within the cup and platter, that the outside of them may be clean also.

    27 Woe unto you, scribes and Pharisees, hypocrites! for ye are like unto whited sepulchres, which indeed appear beautiful outward, but are within full of dead men’s bones, and of all uncleanness.

    28 Even so ye also outwardly appear righteous unto men, but within ye are full of hypocrisy and iniquity.


    Whether a believer or not in who said and wrote them these are wise words.

    Who are today’s “Scribes and Pharisees”, yet still they are hypocrites ?

  7. Pingback: Mario “Damp Squib” Draghi | Roger Helmer MEP

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