May 09, 2016

Mario Draghi, if a nanny, would tell children “Beware of the foul smelling and be kind to the nice giving you candy”

Sir, Wolfgang Münchau comes out in a full-fledged defense of Mario Draghi and ECB against Germany. He argues that had Berlin raised investment spending at home the ECBs´ job of cutting short-term rates to negative levels and buying financial assets, in order to achieve its inflation target would have been easier and it would not have had to cut rates by as much. “The high cost of Germany’s savings culture” May 9.

I will not argue against this but just remind Münchau that no matter how much Germany cooperates, if the resulting stimuli cannot flow to where it can be best used, the whole exercise might just complicate matters more.

And in this respect Draghi is a bank regulator who believes those rated below BB- are more dangerous to the banking system, than those rated AAA... and that should be indicative enough that he, and his regulating colleagues, are simply not up to the job.

@PerKurowski ©