Eurozone: The independent ECB is dead
7 September 2012
Die Welt, Süddeutsche Zeitung
The debt buyback programme announced by Mario Draghi is a sign of the European Central Bank's subjection to political power, laments the German press, which is alarmed by this new shift in European monetary policy.
“A seawall has been breached”, announces the front page of Die Welt. With the announcement that it is ready to buy up the debt of financially distressed Eurozone states, the European Central Bank has demonstrated that it will now restrict its role to one in which it acts as a lifeguard, complains the conservative daily –
Every time the politicians cry “Fire!", the central bank puts it out. Now it buys government bonds, now it plays the role of interim financer for a bankrupt Greece, because European governments and the International Monetary Fund are unable to decide whether they want to loan more money to the Mediterranean republic.
“But how can the ECB, withstand the pressure from governments and hold off from cranking up the money printing machine?” wonders Die Welt, which expresses its sympathy with the traditional German concern for the independence of central banks in nation states and on the level of Europe –
In referring to the possible collapse of the eurozone Draghi is trying to justify his trampling over the statutes of the ECB. That means he is doing the dirty work for the governments, which thanks to the backing of the central bank can again slow down the tempo of reforms. At the same time, the vaults of the ECB will be swamped with government bonds from the countries in crisis. [...] The dangers of this policy are enormous. Inflation is not the great problem of the moment. That problem is, rather, a completely non-transparent, politically illegitimate redistribution of wealth from North to South. And from those who save their money to those who profit from this irresponsible monetary policy. This is undemocratic and not in the best interests of society.
Süddeutsche Zeitung, which is usually more sympathetic to distressed countries' appeals for flexibility, announces that the ECB is "rewarding economic mismanagement". The daily adds that a plan to buy-up unlimited quantities of debt will inevitably mean that the central bank will "finance states that are by no means solid". Worse still, with declarations to the effect that he will do "whatever it takes" and that the euro is "irreversible", Mario Draghi has clearly exceeded his mandate –
Only the representatives of governments can make such declarations. It is intolerable that an institution which has no democratic legitimacy should decide on living conditions in Europe. […] The ECB is emerging as the demonic dominatrix of Europe. It still has a chance to back down from this position, which is precisely the point of the persistent protests voiced by Bundesbank President Jens Weidmann. At the end of the day, Mario Draghi knows very well that the euro cannot be saved by going against Germany, which is the biggest economy in Europe. It is in Europe’s interest that the ECB and other unconditional saviours of the euro avoid measures that will result in Germans mounting the barricades. They are close.