You're right, the odds are massively stacked against the Eurozone's survival. The single currency is the greatest single mistake (though there are others) of the European project.

Your media examples remind me that this morning, on French public radio, the usual economics editorialist, an ultra-liberal journalist with Les Echos, came up with a surprise: according to new statistics, France would have been out of the trough of the financial crisis by 2011... if it hadn't been for the euro and Eurozone policies. That piece of news is going to give the pundits a job spinning. They'll probably ignore it.

Es ist völlig legitim, Verbraucher nach ihren Inflationserwartungen zu fragen. Das Problem ist nur: Die Befragten geben auf eine ganz andere Frage eine Antwort; nämlich darauf, wie sie die Entwicklung der Kaufkraft einschätzen. Genau das ist bei der aktuellen GfK-Umfrage passiert.

Was aber passiert, wenn ich in meine Lohntüte starre und feststelle, dass mein Gehalt um ein Prozent gestiegen ist, die Inflation aber bei zwei Prozent lag? Dann habe ich an Kaufkraft verloren. Die gefühlte Inflation ist hoch. Wenn mein Einkommen im nächsten Jahr dann plötzlich um drei Prozent steigt - bei unveränderter Inflation - dann steigt meine Kaufkraft. Die gefühlte Inflation fällt. Objektiv hat sich aber an der Inflationsrate nichts geändert.

Genau das ist jetzt passiert. Nach Erhebung des Statistischen Bundesamtes ist die Kaufkraft in Deutschland im Jahre 2013 tatsächlich gefallen. Die Löhne stiegen um 1,3 Prozent, die Inflation betrug 1,5 Prozent. Der Reallohn fiel also um 0,2 Prozent. Und damit fühlte sich die historisch geringe Inflationsrate relativ hoch an.

And the monetary authorities contribute to this when they come out and say that people shouldn't worry about low inflation because it improves purchasing power. Nice bait-and-switch.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

Savers make nothing, run nothing, build nothing. They are hoarding inherently worthless tokens - money - and demanding that society must maintain not merely a stock of the particular commodities they might wish to consume at some future date, but an entire industrial supply chain to provide them with fully flexible choice of what to consume, if and when they should decide to do so. And they have the utter gall to demand that society performs this astonishing service not merely for free, but at cost!

So fuck 'em. Inflate the fuckers' savings away, and if they piss and moan about not having old age pensions, well then they could have fucking voted against politicians who dismantle the public pension system. I have no sympathy whatever for people who first vote to destroy the public provision of old age pensions and then demand that the public must protect their private hoards.

- Jake

Friends come and go. Enemies accumulate.

But it used one of my favored switch and bait tactics: Now that the situation is going radically down hill, ECB action will probably change nothing (which is most likely true, we need fiscal action). Ergo: Why do anything!

So, what might the ECB do today?

Effectively there are five tools in the monetary policy toolbox which it could grasp.... and my colleague Katie Allen has rounded them up here:

• Cut interest rates (both the headline rate of 0.25%, and the 0.0% rate paid on bank deposits at the ECB -- which would herald negative interest rates)
  
• A new programme for bank lending, perhaps fashioned like the Bank of England's funding for lending scheme which provided cheaper credit to banks.
  
• It could inject more liquidity into the system by stopping 'sterilising' bond purchases it made during the eurozone crisis in 2012
  
• Reviving the asset backed securities market -- to help banks package up SME loans into packages which can be told on (but with tighter controls than in the run-up to the financial crisis)
  
• A full-blown QE programme -- printing euros to expand the money supply and drive inflation up
  

Or it could do nothing....

After the March 30 local elections, Turkish Prime Minister Recep Tayyip Erdogan began applying suffocating pressure on Erdem Basci, the governor of Turkey's Central Bank, to lower the interest rates he deemed as too high.

The frequent calls to "lower the interest rate" by Erdogan in his usual abrasive manner, in a language tantamount to scolding, are threatening the presumed independence of the Central Bank and denting the international prestige of the institution.

[...]

Erdogan's reaction to Basci was harsh. In his address to the AKP parliamentary group on May 27, he said, "So what? What independence? ... Don't make fun of people [by lowering the interest rate by] half a point. This interest rate is too high. This has to go down so that real investments will increase. We are politicians. We are accountable to people."

He continued, "It's enough. I have to say this. ... The interest rate is the cause, inflation is the effect."

According to Erdogan's thesis, which points to inflation as an effect of interest, if the interest rate is lowered, inflation will follow.

ECB imposes negative rates on banks, and cuts benchmark interest rate to 0.15%

Breaking: The European Central Bank has cut the refinancing rate, the headline interest rate across the eurozone, to 0.15% from 0.25%.

And it has also taken the historic decision to impose negative interest rates on the region's banks, to -0.1% from 0.0%

If this is all, it will not do much. We will drop towards all-out deflation in a few month.

10% export surplus. Every year. That's insane - you cant keep on selling more stuff than you buy and get paid, it is a logical and accounting impossibility.

 Boosting consumption by ten percent would likely boost german output and labor force participation - and there is significant slack there - so demand has to grow by a good bit more than ten % to bring things back into balance.

 Since wage hikes that large probably would cause some inflation, in order to balance things, it would likely be necessary to hike wages 20 + % in nominal terms.

It bloody well has to be possible to sell this to the german people, if not the current german government. The problem with their economy isn't that they are living beyond their means, the problem is that they are living Vastly beneath their means.  

Not once was the downside of doing nothing mentioned.

Tagesschau had only a short report on the decision and they obviously gave the word to Sparkassen-Präsident Georg Fahrenschon.