Mario Draghi: Dangerous Dictator?
Monday’s edition of the Telegraph newspaper carried a headline, “Mario Draghi: More Dangerous Than Kim Jong Il.”
The comparison is an interesting one from one perspective: The late president of North Korea was a dictator having supreme authority, accountable to no one. Mario Draghi, president of the bank that is dictating fiscal policy to the world’s largest trading bloc, the European Union, is accountable to no other authority than himself.
As an extension of this comparison, Kim Jong Il virtually held the world to ransom with the threat of nuclear war. Draghi currently holds the world to ransom with the threat of the collapse of the means of exchange with which much of the EU enacts its global trade—the euro.
Kim rattled his nuclear sabers to scare off the world. The latter is scaring the world into a fear of a global financial collapse of nuclear proportions.
It’s an interesting comparison.
Largely an unknown till he assumed control of the world’s largest central bank on November 1, Draghi has been developing a more public persona of recent date. His most recent interview was with the Financial Times. It contains some interesting vignettes that somewhat explain Draghi’s intransigent stand on the euro crisis.
“It is a sometimes legalistic—at times, even theological—debate,” the FT writes (emphasis added). That is a point not yet seen by the vast majority. There is a “theological” entity at the root of all this, playing its hand extremely carefully, given its almost-2,000-year history. We have pointed to this crucial part of the equation numerous times.
“The important thing,” Mr. Draghi says, “is to restore the trust of the people—citizens as well as investors—in our continent. We won’t achieve that by destroying the credibility of the ecb. This is really, in a sense, the undertone of all of our conversation today.”
It is just possible that this Jesuit-educated son of Rome is in tune with the Vatican’s plan for a “new evangelization” of Europe, to “restore the trust of the people,” the true “undertone” behind German elites leading the “conversation” behind closed doors in Rome, Berlin and Brussels.
Either way, the Financial Times interviewer did sound a realistic warning: “… 2012 may well mark the moment when the euro’s fate is settled.”
Aware that grave dangers face the eurozone economies in the new year, Mario Draghi loosed the purse strings of the European Central Bank (ecb) on Wednesday. As the Washington Post reported (December 21):
The European Central Bank announced Wednesday that it is loaning about $640 billion to European banks for an unusual three-year term as part of its effort to free up credit tightened by the eurozone’s government debt crisis.
Statistics released by the Frankfurt-based ecb showed that 523 banks signed up for the loans, the largest infusion of cash since the euro became the common currency of a number of European nations in 1999. In all, 17 nations have adopted the currency, which was seen at its inception as a boost to economic stability but has in recent months come under withering and perhaps fatal attack.
Some see this latest move by Draghi to ease EU banks liquidity as a trick designed to circumvent EU treaty obligations that currently restrain the ecb from becoming the lender of last resort to EU member nations’ governments.
“Reports in Paris suggested some governments also hope the loans will make it possible for banks to buy government debts when cash-strapped governments issue bonds early in 2012. In effect, the reports said, this would be an indirect way of having the ecb become the lender of last resort for indebted governments—something it is forbidden from doing directly by its founding statutes” (ibid).
On the euro’s fate hangs the fate of the global economy. The test year is 2012, beginning with the EU governments’ bond auctions in the first quarter of the year. What other cards does Mario Draghi, the “war dragon” of the ecb, have up his sleeve?
The time is fast approaching when Mario Draghi, unfettered president of the most powerful bank in the world—the European Central Bank—will prove whether or not he is, indeed, “more dangerous than Kim Jong Il”!