"Europe is conducting one of the most unorthodox experiments of the last 100 years (a competitiveness adjustment mostly through wage and price declines instead of currency devaluation), and they are making it up as they go."
Euro countries face problems that won't quit. Peripheral nations are deeply troubled. Massive capital outflows hammer them. Southern Europe is experiencing the greatest amount "the modern world may have ever seen."
Cembalest's bottom line is that Draghi may be in way over his head. He's holding on to "trillions in loans and bonds that the private sector won't want to own unless there is a miraculous rebound in growth and employment." It's nowhere in sight.
He dubbed the ECB the "European Creosote Bank." He can't explain what he means except to say it relates to a fictional character eating "several plates of mussels, pate de foie gras, beluga caviar, eggs benedict, leek tarts, frogs' legs," and other assorted delicacies washed down with bottles of expensive wines, champagne and ale. The result isn't pretty.
Other analysts call Draghi's plan short-term relief at best. It's a financial equivalent of France's Maginot line. It's vulnerability is clear. Outflanking it is likely.
Troubled banks need restructuring. Peripheral economies need massive amounts of help. Perhaps it's beyond what's possible to provide.
Instead of addressing problems responsibly, Draghi and political leaders opt for punishing austerity, rising unemployment, lower investment and consumption, deeper recession, and eventually a Eurozone breakup.
Phoenix Capital Research's Graham Summers calls the EU beyond saving. Its banking system is 36 trillion euros in size. Its deposits are 15 trillion euros.
Germany hasn't enough resources to backstop troubled countries. "No one does. The money simply does not exist." Too much is needed. If Draghi oversteps, Germany will exist the Eurozone and go it alone. It's very concerned about future inflation.