ECB to support only banks not Peoples

The Governor of the European Central Bank, Mario Draghi, presents the new €5 banknote. The question is who is going to profit from it?

The Governor of the European Central Bank, Mario Draghi, presents the new €5 banknote. The question is who is going to profit from it?

In two different articles the European Sting yesterday made important references and observations on the policy lines followed by the European Central bank.

ECB’s double standards

Maria Milouv in her article entitled, “European financial values on the rise”, commented as follows: “With the prospect of a further reduction of ECB’s interest rates appearing now more distant than in December, after some relevant comments by Mario Draghi yesterday”. In short Milouv said plainly that Draghi is sending a clear message to governments that the ECB will take no growth supporting measures by further reducing its interest rates this year and thus will not contribute to their efforts to resurrect growth in the crisis stricken money zone.

In another article entitled “Draghi hands over to banks €77.7 billion more” also yesterday the same writer observed:” In practice the ECB is now acting in the Eurozone as “lender of last resort” for practically every bank, a function that the ECB’s governing council was denying until recently”.

Those two observations depict quite different policy lines followed by ECB under Mario Draghi. In the case of efforts to re-establish economic growth in Eurozone Draghi says that the ECB will not help, while on the other hand ECB reassured everybody that Eurozone’s central bank will not let not one bankrupt bank without help.

In short ECB says clearly that in the case of commercial and investment banks it will do whatever it takes to support them even if they have become illiquid by their own greed, but will do nothing to help governments restart the real economy and create jobs. Mind you that both actions are not foreseen by the statutes of ECB.

If this is not an ostentatiously double standard policy then words have lost their meaning. But how come and the ECB arrived at such an anti-social policy line? Even the American central bank, the Fed, has as structural part of its policy goals the resumption and support of growth and the creation of jobs in the real economy. We will see that Draghi had a key role in this.

Countering the crisis

Over the past few years that is all along the difficult period of the credit and fiscal crisis in Eurozone after 2009 the European Central Bank has being reshaping its role. The problem was that as from its institutionalisation the single currency zone’s central bank had a muted role in comparison to other major central banks; it couldn’t act as a “creditor of last resort” nor could it include economic growth and job creation in its policy mix. ECB could only use its basic interest rate instrument to control inflation. The reason was that ECB was built-in the tradition of the German Bundesbank, with no ability to help governments in their effort to target growth. No accommodation by ECB for economic growth just for banks.

However the 2008-2009 great credit crunch in the US and the subsequent sovereign debt and fiscal crisis in Eurozone forced the governing council of ECB to overcome its institutional mutation and intervene actively in countering Eurozone’s crisis. The new extraordinary measures taken by ECB started materialising even with Jean-Claude Trichet in its steering wheel and took prodigious dimensions with Mario Draghi, with billions of long-term loans to Eurozone’s 5,000 banks in 2012. The same policy will be continued in 2013 according to “Super Mario”.

On the contrary Draghi issued yesterday a warning to governments that the ECB will not do the same to help them resurrect growth and create jobs. Seemingly there is not enough ammunition in ECB’s arsenal to serve both targets. The problem is however that Draghi doesn’t want to serve both purposes and on top of that he, an appointed bureaucrat, finds the courage to issue further warnings to elected governments. In his introductory remarks during the monthly press conference yesterday in Frankfort he said: “As regards fiscal policies, the recent significant decline in sovereign bond yields should be bolstered by further progress in fiscal consolidation in line with the commitments under the Stability and Growth Pact”.

In short he not only refusing to help the 17 Eurozone governments in their quest to create jobs but he issues directives over what they should do. For god’s sake who is he? Where from he finds the power to set policy lines for 17 governments and an equal numbers of European Peoples? Is it the end of democratic rule and the beginning of the banks’ era? Just yesterday the head of the Swiss banking group UBS accepted that bankers have become arrogant and have negative culture, meaning obviously that they don’t care about the legality of their actions nor they mind about anything else than their profit.

Is this the era of the banks? Is our democracies in danger from the money sharks? Can they buy their way through to our democratic institutions? Is there a cure for all that or the Draghis will govern our land?

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Are ECB’s €500 billion enough to revive Eurozone? Will the banks pass it to the real economy?

Italy’s rescue operation Mare Nostrum shuts down with no real replacement. EU’s Triton instead might put lives at risk

What happens when you toss your water bottle in the trash?

The hidden risk of virtual reality – and what to do about it

The world needs a grand coalition to tackle climate change

Bill Gates: How HIV/AIDS prepared us to tackle COVID-19

Child victims of DRC Ebola outbreak need ‘special attention and care’: UNICEF

Sudan military committed to ‘ensuring stability’ and ‘peaceful transition’ says senior diplomat, as UN rights chief appeals for protesters’ rights to be upheld

How revealing the cost of coal makes us all better off

A safer, more dignified journey for all migrants, tops agenda at global conference in Marrakech

Missions of Our Time Shared by China and EU

MEPs vote to limit negative impact of no-deal Brexit on citizens

A jingoistic Spanish ‘war’ from the past

UN agencies call for more resettlement and end to detention of asylum seekers in Libya

These 11 companies are leading the way to a circular economy

Easing ‘classroom crisis’ in Côte d’Ivoire, brick by (plastic) brick

LETTER FROM AFGHANISTAN: Elections serve up food for thought, for Afghan youth

Traffic congestion cost the US economy nearly $87 billion in 2018

Portugal wants its emigrants back – so it’s paying them to return

Here’s how to rebut the climate doom-mongers

Space science now a ‘fundamental pillar’ of 21st century human development: top UN space official

EU consumer rules: Airbnb cooperates with European Commission and EU consumer authorities improving the way it presents offers

Commission puts in place transparency and authorisation mechanism for exports of COVID-19 vaccines

Medical students of today, technological doctors of tomorrow

We need to rethink the way we heat ourselves. Here’s why

EU Top Jobs summit ended with no agreement: welcome to Europe’s quicksand!

Central Africans ‘need our help now’: UN’s deputy relief chief

The EU spent €158 billion on vague, open-ended rural projects

The 4 types of leader who will thrive in the Fourth Industrial Revolution

Algorithmic warfare is coming. Humans must retain control

FROM THE FIELD: Hardy seeds bear fruit to protect Colombia’s environment

UN envoy commends successful conclusion of Guinea-Bissau presidential election

Refugee crisis update: EU lacks solidarity as migration figures drop

Thursday’s Daily Brief: Safeguarding civilians, strengthening Ebola response in DR Congo, marking Fistula Day, updates on CAR and Syria

UN and partners call for solidarity, as Venezuelans on the move reach 4.5 million

Billions for sustainable investments – Germany’s plan for a green recovery

A Sting Exclusive: “Cybersecurity: Why consumer products must be looked at urgently”, by BEUC’s Deputy Director General

The 28 EU leaders don’t touch the thorny issues

Migration crisis update: lack of solidarity not only among EU leaders but also EU officials

UNICEF urges all countries to provide ‘Super Dads’ with paid leave

EU long-term budget deal must be improved for Parliament to accept it

Heart attacks and strokes are more common on high pollution days, data shows

As Syria conflict enters ninth year, humanitarian crisis ‘far from over’, Security Council hears

Brexit Preparedness: European Commission adopts final set of “no-deal” contingency measures for Erasmus+ students, social security coordination rules and the EU budget

Technophobe or technophile? We need more conversation about digital transformation

This is how we can empower 8 billion minds by 2030

Shifting Tides: Policy Challenges and Opportunities for the G-20

Kazakhstan continues to push for a nuclear-free world

Turkey needs to step up investment in renewables to curb emissions

New UN Global Climate report ‘another strong wake-up call’ over global warming: Guterres

Accountability for atrocities in Myanmar ‘cannot be expected’ within its borders – UN investigator

How AI is shaping financial services

Coronavirus: Commission holds first meeting of EU COVID-19 national scientific advice platform

Connect 4 Impact – a virtual journey around the globe WSA Global Congress 2021 – March 22-24

Merkel, Mercedes and Volkswagen to abolish European democracy

Coronavirus: Using European supercomputing, EU-funded research project announces promising results for potential treatment*

How can we make enough vaccine for 2 billion people?

At last a solid base for the European Banking Union

Let Nagasaki remain ‘the last city’ to suffer nuclear devastation says museum director, as UN chief arrives

Trump systematically upsets global order and trade: Where does this end?

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s