Euro Crisis: Draghi Cool While Others Crack
Talk about cool!
Mario (the “war dragon”) Draghi is sure giving the impression of being one cool customer as he sits high on the European Central Bank’s pile of bullion and paper money, printing presses at the ready, while nation after nation in Europe is collapsing under the strain of massive debt. Europe is literally riding out its greatest crisis since World War ii, a crisis that’s been now given an extra shove by Standard & Poor’s downgrade of the credit rating of another nine EU nations.
There will be more blood on the carpets at the main stock exchanges as they open for business Monday morning. Not only has the ratings agency cut France’s triple-A rating, but in one fell swoop it pounced on six other EU economies, cutting Austria’s triple-A rating and downgrading Italy, Malta, Portugal, Slovakia, Slovenia and Spain, while trashing Cyprus and Portugal into junk territory. There’s no further downgrade left for poor old Greece. The next step is an abject default on its debts.
To add further fuel to the eurozone fire, S&P published a statement on Friday denigrating the current draft of the EU fiscal compact, declaring that it “does not supply sufficient additional resources or operational flexibility to bolster European rescue operations” and noting that “a reform process based on a pillar of fiscal austerity alone risks becoming self-defeating, as domestic demand falls in line with consumers’ rising concerns about job security and disposable incomes, eroding national tax revenues” (EU Observer, January 14).
It further noted that with the worst-hit EU nations, “there is a risk [of] reform fatigue” creating a political climate manifesting “lower levels of predictability.”
In addition to adding further strain to existing tensions between the United States and the European Union, S&P’s actions on Friday will create further turmoil within the eurozone, posing colossal political headaches for its leaders. The facts are that these leaders are caught between a rock and a hard place.
The inflexible eurozone rules, plus the enforcement of draconian economic reforms, are placing many a eurozone nation on a fast road to penury. Yet, one in particular is riding high on the crest of euro devaluation—Germany, the very nation whose elites created the eurozone and its rules specifically to favor its massive export economy.
In a marked contrast to the manner in which it treated France and the other downgraded EU nations, S&P maintained Germany’s triple-A rating and reserved special praise for Mario Draghi’s handling of the European Central Bank. The ratings agency “praised the European Central Bank,” saying it “has engaged in unprecedented repurchase operations for financial institutions, greatly relieving the near-term funding pressures for banks” (ibid).
On the very eve of the S&P downgrades, Mario Draghi—ever the master diplomat, no doubt a legacy of his Jesuit education—coolly sidestepped journalists’ questions at his press conference last Thursday with fob-off answers designed to encourage a confidence borne of their ignorance of the true nature of the EU’s high-risk status quo.
In announcing that the ecb would not be changing interest rates, Draghi gave a man-for-all-seasons rider to the ecb’s stance by declaring: “The economic outlook remains subject to high uncertainty and substantial downside risks. In such an environment, cost, wage and price pressures in the euro area should remain modest and inflation rates should develop in line with price stability over the policy-relevant horizon.”
That’s not quite Greenspan-talk, but it really does not say much to encourage those sitting on the edge of their seats, biting their fingernails, on the brink of cracking up under the ongoing strain of the euro crisis.
The stress of daily coping with a situation that is not really being addressed in any proactive fashion is beginning to tell on many who are battling to make sense of EU technocrats’ handling of the crisis.
TheParliament.com reported Thursday that, during a Dods Brussels Briefing event held in London in December (involving UK and EU officials, MPs and meps, policy experts and interested stakeholders), Christine Dalby, the deputy head of the European Commission’s UK representation, commented on the Commission’s dithering stance. She said that while the European Commission was initially cautiously optimistic in early 2011 about the economic outlook in Europe, “that didn’t last and the debt hangover is placing pressure on the eurozone.”
Parroting German Chancellor Angela Merkel’s own words, “another official warned that the EU is facing ‘perhaps its biggest challenge since the end of World War ii’ in overcoming the economic crisis” (ibid).
The editor of Dods’ House Magazine and a UK parliamentary representative on the convention on the future of Europe, Gisela Stewart, described the economic crisis as the “mother of all crises, because the single currency is not sustainable.” Warning of the danger of rising tensions while the Eurocrats dither in the face of impending collapse of the eurozone, Stewart continued, “I’m slightly older than the EU, but have never been so scared in all my life. Tensions are cracking up and we’re not facing up to difficulties” (ibid; emphasis added).
Well, I’m a good 50 years older than the EU and have monitored its rise very closely for the past half a century, digging behind the scenes with the aid of the best of analyses and commentaries on its development from 1961 to this very day. The most glaring fact about the EU is that so few—so very few—truly understand the reasons for its beginnings, its mode of development since the early postwar years, the true intent of its creators and just who are the true movers and shakers pulling its strings to ensure their imperialistic vision comes to fruition.
If more people were aware of the true facts surrounding today’s euro crisis, there would be many more tensions “cracking up,” and a lot more reaction to Mario Draghi’s seemingly benign administration of the world’s largest bank.
Not only that, but there would be a lot more repetition of the violence seen now weekly on the streets of Athens. There would be a realization that one nation by far is benefiting from the euro crisis—big time—while others are sinking into poverty as a result of what Mario Draghi terms “balance sheet adjustment.”
Perhaps the penny would drop, and it would dawn on many that it’s the very creators of the EU and the European Monetary Union, the same Teutonic elites who are behind the enforcement of the eurozone rules, whose country is now greatly profiting from the suffering that these penalizing initiatives have now wrought on so many EU nations.
Indeed, if more people were made aware of the origins, the true nature of this beastly European power and the real motives of the imperialist visionaries who are its driving force, they would see Mario Draghi’s closing remarks at his press conference on Thursday not as a balm for the markets, but more as a threat to the peace and stability not only of Europe, but of the rest of the world!
Draghi closed his prepared statement at his press conference by stating, “The further development of the European financial stability tools should make the operation of the European Financial Stability Facility and the European Stability Mechanism more effective. The swift deployment of these tools is now urgently needed. … [T]he [ecb] Governing Council calls for the urgent implementation of bold and ambitious structural reforms.”
To those fully initiated in the true motives of Mario Draghi and his cohorts in Rome, Berlin and Brussels, that latter statement about “structural reforms” is code for the creation of a two-tier Europe, one which will ultimately comprise 10 nations all yielding their power to Rome and Berlin, with the devil taking the hindermost, which will simply go the way of Greece.