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He has resisted incessant pressure from German Bankers and policymakers to end QE and increase interest rates so long as inflation remains below the ECB target rate as close to but below 2%. As a result, inflation has been rising, ever so slowly, and by doing so also reducing the real cost of financing historic debts.
It may not be much, but that is about all the ECB can do to help net debtor countries vis a vis net creditor countries - absent the issuance of Eurobonds, which Germany absolutely refuses to allow - as it would allow (say) the Greek Government to piggy back on Germany's credit rating and ultra low sovereign debt interest rates.
From a German moral hazard perspective, high interest rates is the penalty highly indebted countries should pay as punishment for past profligacy - both to reflect the higher risk of default and as a deterrence from future profligacy.
Draghi hasn't been playing that game.
Index of Frank's Diaries
If that be the case, why were they allowed into the EU? Had no one in the upper levels of EU governance ever come across Mundell's papers on 'optimum currency unions'? The costs in human suffering and EU accepted major injustices mocks the very claims of concern for social welfare on which the project was founded. It has been and remains painful to watch, even if it is currently overshadowed by the fiasco of Brexit and the Trumpeting elephant just across the Atlantic. We - all of us - seem resolute in steering directly for the shoals in this political gale.
"It is not necessary to have hope in order to persevere."
The EU can serve as a convenient bogeyman for national elites to deflect attention from their own policy failures - hence Brexit - but it would be to fall into the nationalist myth of the big bad Brussels bureaucracy to ascribe the primary blame to the EU. If anything, EU competencies in the areas of competition, agriculture, and regional development have served to reduce such regional/class inequalities by breaking up local oligopolies and introducing competition from other national or international oligopolies - euphemistically referred to as costs of transition - and providing opportunities for the more entrepreneurially minded to seek markets elsewhere.
Of course this has also furthered the cause of globalisation, but the EU has at least attempted to mitigate the monopolistic tendencies of global corporates, something national elites (particularly of smaller states) are completely unable to do. So my suggestion is that we need stronger governance of global corporates by the Commission allied to the transfer of more competencies for health, education, social welfare, infrastructure, energy and taxation from national elites to the EU - both to promote common and more equal standards and services, and to effect economies of scale - as in the case of pharmaceutical procurement.
Index of Frank's Diaries
It was as far as I understand the ECB that put Greece under economic blockade in the summer of 2015. The advantage is the loweer visibility it gets then sending in ships to blockade the harbours, but the effects were similar. If the ECB wanted to they could stop wielding the stick when it comes to the deficit countries, there is nothing in the treaties that demands that they do so.
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