Why ‘whatever it takes’ just isn’t going to work for the euro anymore

The trouble is that, while solving a financial crisis, Mario Draghi created an economic one.

It is unlikely anyone will be baking a cake, wrapping any presents, or even sending a congratulatory emoji. But this Sunday marks the third birthday of what, in retrospect, may well have been the most successful speech in central banking history.

Three years ago, on July 26, 2012, Mario Draghi, the president of the European Central Bank, made his promise to do “whatever it takes” to save the euro. Its impact was little short of miraculous. Since then, despite the drama of the past month in Greece, the capital markets have been bought under control. The threat of the bond vigilantes suddenly kicking a country out of the single currency has been ended. Borrowing rates have fallen dramatically. So long as they knuckle under to the conditions of the bail-out programmes, even the most heavily indebted countries can keep themselves afloat. Draghi’s intervention, on that measure, was a spectacular success.

The trouble is that, while solving a financial crisis, he created an economic one. The eurozone is no longer at risk of an imminent financial collapse. But it is facing a grinding depression that has gone on now for year after year, and shows little sign of ending. In time, that is going to create a political crisis, just as it has already done in Greece. Can Draghi fix that as well? So far there is little sign of it.

Lees dit geweldige stuk van Matthew Lynn verder op The Daily Telegraph >>>