Is Eurozone heading for disinflation?

Opening of the "European Space Expo" in London by Antonio Tajani, Vice-President of the European Commission. There he pronounced a speech entitled "European Space Solutions". (EC Audiovisual

Opening of the “European Space Expo” in London by Antonio Tajani, Vice-President of the European Commission. There he pronounced a speech entitled “European Space Solutions”. (EC Audiovisual

It will be very interesting to hear what the governor of the European Central Bank, Mario Draghi, has to say tomorrow in his monthly Press conference, about the fast falling inflation rate and the even faster growing unemployment in Eurozone. Unless he sticks to the letter of ECB’s Statutes and insists, that unemployment does not fall within the mandate of the central bank while inflation remains in the acceptable region.

During the last two days Eurostat, published two alarming statistics. Yesterday it was the unemployment rate which reached 12% in February on the average in Eurozone, but peaked at 27% in Greece and Spain. Today Eurostat issued its flash estimate for the March inflation in Eurozone at 1.7%, down from 1.8% in February. Inflation keeps falling steadily from a high of 2.7% in March 2012.

No action

What else Draghi expects in order to ring the alarms for a worsening recession? Unless he has no interest for the real economy and all his powers are consumed at keeping the banking sector alive, with trillions of euro in liquidity loans at almost zero interest cost.

Every other major central bank in the world would have already announced measures to help the economy resume a growth path. Unfortunately the ECB is tightly bound to the practices and the tradition of the German central bank, the Bundesbank. This institution has as its sole target the protection of the currency from inflation dangers. But for months now there is exactly the opposite risk that is disinflation. In Greece for example annual inflation has already reached 0.1% while the country is losing every year around 7% of its GDP.

What the ECB is going to do for Greece? Obviously nothing, because the misery of an entire country doesn’t fall within the mandate of Draghi. The same is true for Italy, Spain, Portugal even for France and other Eurozone countries. For all those member states which account for more than half of Eurozone’s economy, the ECB says it can’t do anything. Then what good is there for them in being in the euro area?

In any case even Germany will be hurt ,if the current conjuncture continues unstopped towards more recession. Berlin, being the political powerhouse behind ECB’s inaction vis-à-vis the problems of the others, will feel at some point the recession and the fall of inflation towards the danger area of disinflation. Some Germans believe that their exports to the developing world can keep their country afloat. However the core business of Germany’s industrial exports are in Eurozone.

Ulrich Grillo, the President of the Federation of German Industries, said yesterday that Germany cannot live alone, without Eurozone. If Berlin cannot understand what the most competent man has to say over Germany’s industrial future, then the political class that governs this country and sets the pace for Eurozone is becoming a dangerous bunch.

 

 

Services).

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

‘You can and should do more’ to include people with disabilities, wheelchair-bound Syrian advocate tells Security Council in searing speech

UN urges protection of indigenous peoples’ rights during migration

Business leaders join UN to rev up sustainable development investments

THE COMMITTEES: ‘All roads lead to the Fifth’

Uzbekistan wins its long fight against malaria, as global rates continue to rise

Better understanding the psychological impact caused by the COVID-19 Pandemic

Competition: The European Commission launches a process to address the issue of collective bargaining for the self-employed

UN ready to rise above political fray and help Venezuelans based ‘on need, and need alone’

Overcoming the paralysis of trust management across a fractured IT landscape

Korea should improve the quality of employment for older workers

Debunked: 5 myths about the future of work

This man ran across the USA to raise awareness of plastic pollution

Sustainable development demands a broader vision, says new OECD Development Centre report

How AI can inspire doctors to be more inventive

Why a coronavirus vaccine takes over a year to produce – and why that is incredibly fast

Venezuela: ‘Shocked’ by alleged torture, death of navy captain, UN human rights chief urges ‘in-depth’ investigation

FIRST PERSON: An artist’s ‘obsession’ with New Orleans tradition

Air pollution: How to end the deaths of 7 million people per year?

Greening the Belt and Road is essential to our climate’s future

Glaringly false reassurances about the repercussions of the EU-US free trade agreement

Asia’s plastic problem is choking the world’s oceans. Here’s how to fix it

Slovakia and its failure to abide by the European law

Powering a climate-neutral economy: Commission sets out plans for the energy system of the future and clean hydrogen

Parliament elects the von der Leyen Commission

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

World Migratory Bird Day highlights deadly risks of plastic pollution

Medical students of today, technological doctors of tomorrow

Children who exercise have more brain power, finds study

US now has most coronavirus cases in the world – Today’s coronavirus updates

The completion of the European Banking Union attracts billions of new capital for Eurozone banks

Amid troop build-up in Rohingya’s home state, UN appeals to Myanmar for peaceful solution

Draghi’s negative interest rates help Eurozone’s cohesion

Central America: drought, resulting crop losses threaten food security of two million people, UN warns

Brexit: the time has come for the UK to clarify its position

Barriers to trade: as protectionism rises, EU continues opening up export markets for European firms

UN chief extends condolences to families of China landslide casualties

How Islamic finance can build resilience to climate change

EU out to conquer African Union summit

Amid global ‘learning crisis’, Parliaments can ensure adequate resources for education, says UN Assembly President

Security Council extends mandate of UN Interim Force in Lebanon for a year

UN chief urges India and Pakistan to dial down tensions in wake of Kashmir attack

The impact of COVID-19 on the life of the elderly

A reflection of health inequity in recent epidemics

North-east Nigeria displacement crisis continues amid ‘increased sophistication’ of attackers, warns UN

We can meet the SDGs using the wisdom of crowds. Here’s how

On the Global Day of Parents, UNICEF is urging support for parents to give children ‘the best start in life’

Fair completion rules and the law of gravity don’t apply to banks

Why Europe is more competitive than the US

EU strengthens cooperation with Ethiopia

First-ever global conference of national counter-terrorism chiefs will strengthen cooperation, build ‘resilient’ States, says top UN official

‘Unconscionable’ to kill aid workers, civilians: UN Emergency Coordinator

How COVID-19 revealed 3 critical AI procurement blindspots that could put lives at risk

We need to talk about failure in the social sector

The West and Russia took what they wanted from Ukraine

Financial services are changing. Here’s how

9 climate tipping points pushing Earth to the point of no return

Climate change: Another year of record gas emissions, warns UN meteorological agency

EU will not deliver on promises without democratic accountability

What are we actually working for?

EU readies for eventual annulment of the Turkish agreement on immigrants-refugees

More Stings?

Advertising

Comments

  1. It is really an superb article and that i totally realize where your caused by from the third part. Perfect study, I’ll on a regular basis follow the other states.

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