Bad policies yield bad results.
by Stephen Lendman
Did he or didn't he? ECB president Mario Draghi promised "whatever it takes." Great expectations arose. August 2 was D-Day.
Fizzle followed sizzle. Bazooka plans stalled. More on Draghi's pronouncement below and what it means.
Europe's economy is broken. Monetary intervention solved nothing. Core problems fester and grow. Contagion spreads everywhere. Effective solutions are absent.
Bankers are prioritized over sound economics. Western policy makers march to the same drummer. Ordinary people suffer. Poverty, unemployment, and deprivation grow exponentially. Nothing ahead looks promising.
Promises became hope and uncertainty. It doesn't matter what Draghi said. He can't deliver. At best he can delay an eventual day of reckoning. Unaddressed systemic rot draws it closer.
Draghi said "(t)he Governing Council....may undertake outright open market operations of a size adequate to reach its objective. We will consider further non-standard....measures....In the coming weeks, we will design the appropriate modalities for such policy measures."
Implementation takes time, he stressed. Markets "only adjust once success becomes clearly visible." Governments must "activate the EFSF/ESM (European Financial Stability Facility/European Stability Mechanism)."
EFSF borrowing authority exists. It's capped well below what's needed. The late Bob Chapman estimated $6 trillion. What's available and likely is a drop in the bucket. Chapman predicted a certain train wreck. Only its timing is unknown.
ESM authority is proposed. It's not in place. It's a permanent bailout fund. Creation depends on Germany's Constitutional Court and parliament. Judges must agree to change German constitutional law.
Doing so requires national referendum approval. Perhaps legal requirements will be twisted to avoid it.
Parliament must then act. Doing so is planned for September. Betting odds suggest surrender. Chancellor Merkel long ago sold out to Brussels.