Makes no difference on a macro level – the credit supply will still contract.
Although on a indivdual level people on fixed rates will get crucified while the tracker crew will get some relief.
Super Mario very dovish. More cuts to come. He will be our new hero. No announcements on ECB ramping up measures yet though.
*DRAGHI SAYS SIGNIFICANT CUT TO GROWTH FORECASTS ARE LIKELY
*DRAGHI SEES `INTENSIFIED DOWNSIDE RISKS’
*DRAGHI SAYS INFLATION RATES EXPECTED TO FALL FURTHER
*DRAGHI SAYS RISKS TO THE ECONOMIC OUTLOOK ARE ON DOWNSIDE
*DRAGHI SAYS LOW SHORT-TERM RATES WILL HELP TO SUPPORT GROWTH
*DRAGHI SAYS HIGH ENERGY PRICES COULD DAMP GROWTH
This won’t work. There’s still too much debt. Japan tried 0% interest rates and got two decades of stagnation for its trouble.
Ultimately the ECB is going to have to start letting banks go, orderly weekend winddowns, and yes telling bond holders that they will have to accept that their bets aren’t guaranteed going to pay out anymore.
Supermarionation says high energy prices caused by super low rates won’t feed into inflation (as they won’t be measured), we’ll all just get poorer as our energy costs rise and the economy stagnates.
‘Contradiction’ removed from ECB glossary.
@ The Dork
Okay Dork, what exactly, exactly now, would you have Draghi do?
@Obsessive
You don’t get it – its us or the banks
The ECB is the banks.
Its a case of pure survival now from both perspectives
This was typical classical nonsense from Mario – when you cut your cloth collectively the surplus must flow somewhere and its to the banks.
@Gavin
Nationalise money of course – but he would be out of a job so don’t bet on it.
My bets are on Gold – its the only way they can peserve their precious debt contracts.
Otherwise they will strip the physical economy to the bone to peserve a fictional value to the currency which unfortunetly they have partially done so far.
The only way to peserve the currency is to destroy fraudulent credit – they won’t do it however – their fiefdoms are precious to them.
*DRAGHI SAYS HIGH ENERGY PRICES COULD DAMP GROWTH
The FT had a piece on this back in q1 when oil went north. Every $10 increase in the oil price reduces global GDP growth by 0.2%, I think it was .
Basically the West is tied into the system of repression in the Middle East.
Iran will never be allowed to shape events. Unless there is no choice.
From the israeli paper ha’aretz today but it’s very like the decision on whether or not to keep Greece in the EZ
“When we stand at the crossroads we will have two options – prevention or deterrence. To launch a military offensive or to emerge from nuclear ambiguity. One way or another, all chaos will break loose in the Middle East. One way or another, all chaos will break loose in Israel. What was will be no more. A new era will begin.
So the debate we must have now is not whether to send the bombers before the sky is covered with clouds. The debate we must have is whether the Israeli government has spread a diplomatic Iron Dome over Israel, to protect it in the hour of truth. Has it moderated the conflict and reduced the occupation and stabilized the border? Has it won the world’s heart? Has it united the people? Has it prepared the homefront? Is Israel ready for a challenge the like of which it has not faced since 1948?”
@ All
listen, today is like a wet dream to the Dork. Please, for the love of all that is holy, DNFTT….
@ Dork,
He could provide funding for that tunnel under the Irish sea you are fond of. Hell, if Panama can have it’s canal…
@seafoid
Text from Blind Biddy in Damascus: “The threat is real.”
Increase in money supply might lead to increase of price of imports.
Printing euro to buy government debt (or anything else) is increasing the money supply. Oil is imported from outside the euro-area.
The combination of the two statements might be interpreted as: ECB using the ‘wall of money’ approach might reduce growth in the euro area.
@ Seafoid,
That’s a really, really scary situation. Way more so than anything to do with Greece. I suppose that’s adults in charge eh!?!?!
@Bond. eoin bond
Nikki’s French banks dumping greek and italian sov bonds by the truckload in billions?
You might be a good bit ‘off’ on democratic futures – but what’s really goin on in the day job?
@Disgruntled
Yes – notice how he talks about our oil dependency but does nothing about it – i.e. provide MONEY with no interest to goverments so that they can break their habit.
There is a reason OPEC meets in Switzerland you know………..
Yesterday the Cork Swansea ferry was put in Examinership because it takes 18,000 euros to fill the tank………
In 2006 alone we spent 50 billion on mainly useless fixed capital investment.
The Tunnel could be much less if the Geology was right and at even 5 billion a year for a decade of construction that would be 50 billion – chickenfeed compared to consumption
Airplanes needed 2 world wars and a Cold war of technological capital investment before they replaced Atlantic passenger liners…………
Zero sum Ryanairs do not create real net wealth.
“Supermarionation”. That why I like this site!
“DRAGHI SAYS HIGH ENERGY PRICES COULD DAMP GROWTH” Never!
Ok, so we substitute. “Er, with what?” Another inelastic commodity? We know it works in theory, so it MUST work in practice?
Judging by the slow incrementation of energy comments, maybe, just maybe, a nasty truth is dawning.
Brian Snr.
Mario is in a balloon and has 5 sandbags left to regulate his altitude.
He doesn’t have much to play around with, does he ?
@David O’Donnell on the effect on fuel prices of the next politically opportune war in the middle east. Many will miss the reference.
“The threat is real.”
The furious spinning (multiple unattributable sources) that has begun for war with Iran thing is indeed very frightening, but it is also fascinating how after the failure to find WMD in Iraq the justification for attacking Iran has become more psychological than physical.
Preparations for war are being explained by the “West” being afraid that Iran might want to develop nuclear weapons. It was merely a logical impossibility to prove the absence of WMD in Iraq, the new meme does away not only with the demands of logic but with the idea of actuality.
Slam dunk thought crime.
@Seafoid
The Board controls the only money in the eurosystem – if he wants to reduce our oil dependecy he gives euros to Goverments , the goverments agree to give those euros to Alstrom.
Its that simple baby.
Also from Mario, quoted by FT
One has no reason to doubt the commitment of the [Irish] government
Life in the Greater Franco-German Co-Prosperity Sphere.
Interest rate cuts are _a_ tool of monetary policy, with the aim of increasing money supply/liquidity/investment
The Ecb needs to consider the _aim_ of monetary policy, and then assess its toolkit. The Germans will shriek over anything ‘unorthodox’….but if it fulfills the aim/mandate…so what ?
I wonder what precisely Draghi means by ‘a disorderly correction in global imbalances’? I think he was saying he can see one coming. I didn’t catch it all.
Likely referring to trade imbalances and associated currency oddities…if G20 didn’t have to do all this politically caused nonsense Ez firefighting…they’d have time to consider the currency oddities
As Prof Sinn stated, and here I agree with him, ECB activity will become automatically inflationary.
Anyone hear Noonan today? He’s looking for a 20 billion debt reduction apparently:
IMF Survey: Iceland’s Unorthodox Policies Suggest Alternative Way Out of Crisis As policymakers continue to grapple with the problems facing the crisis-hit countries in the euro area and the clouded economic outlook for the global economy, attention has turned to Iceland, which three years ago saw its entire banking system crumble in just a few days.
‘… if G20 didn’t have to do all this politically caused nonsense Ez firefighting …
S’pose you’d prefer a dictatorship of the Financial System over the nuisance of politics, democracy, and citizenship.
a little flavour of Iceland … [for financial system spinners in particular ..
“Iceland’s heterodoxy gives us a test of economic doctrine,” Krugman said. Comparing Iceland to Ireland and Latvia (both members of the European Union), he argued that the former has fared much better than the latter in terms of growth and jobs.
And despite warnings that economic Armageddon would follow Iceland’s decision not to accept liability for the losses of private banks, credit default swaps on sovereign debt are now much lower in Iceland than in Ireland, where the state assumed full responsibility for bank losses, he said.
“Iceland has done fine in terms of regaining not total, but reasonable confidence in its sovereign debt. The idea that there would be a huge reputational penalty for allowing private sector parties to go bust and default on their external obligations has not turned out to be true.”
Another Nobel Prize winner in economics, Professor Joseph Stiglitz of Columbia University, also endorsed Iceland’s policy response. “What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system,” he said in pre-recorded remarks screened at the conference.
Other speakers who strongly supported Iceland’s decision not to bail out the banks included MIT professor and former IMF chief economist Simon Johnson, who also warned that the world’s financial system remains “a big house of cards.”
@all
I note that Simon Johnson has also written recently that Irish vichy_bank/sovereign debt is unsustainable …
@Philip Lane
Iceland thread on the above might give us a greek vacation for a day or so – the IMF link also includes links to the Conference Presentations etc
I wonder for how many more years interest rates will be below 2%. It is some crisis.
Does it matter if the interest rate falls. The rate customers have to pay on variable rates will not change. The central bank is saying it will enforce this rate cut to be passed on through some unknown means.
Using a big stick they will say “pass on the interest rate and if it costs you (the banks), sure we will bail you out again”.
And the other big news of the day is that the governments raid of peoples private pension funds to fund their folly of a jobs program has not worked as per the increase in the jobless number released today, up over 2000.
@ Damien
60% of people have tracker mortgages, and Irish Life already said they will pass on the cut to customers on variable rates too…
€71.6bn outstanding in tracker mortgages (CBI @end June). ¼% cut is a saving of €179m/year for tracker holders.
Trackers ??
You forget – the banks losses and the states are one now , its what happens when you nationalise banks & their debts while not nationalising money.
It means we are strategically tied to bank “investments” and cannot engage in a rational industrial policey until they are paid off in a few decades.
We are bollixed.
@Shay Begorrah
Most unhelpful development … but I assume, once again noting that assumptions are always dangerous, that sufficient sanity will prevail.
Its the right decision and hopefully will cause the Euro to weaken a little vs its trading partners.
Overview article from the Telegraph.
‘ECB President Mario Draghi cuts the euro’s last lifeline’
Quote:
“And while the ECB apparently sees it as not part of its job to act as lender of last resort to countries, it is perfectly happy with that position as far as the banking system is concerned. Banks were again promised unlimited liquidity by Mr Draghi on Thursday.”
The take I have at the moment is: ECB refuses to be the lender of last resort for the eurozone area – G20 turn to IMF to take up the slack.
Is that about right?
Given the track record of the IMF and ECB over the last few years, might that be a positive thing?
By the way, here’s the mission statement of the ECB, which is admirably brief:
“The mission of the Eurosystem
“The Eurosystem, which comprises the European Central Bank and the national central banks of the Member States whose currency is the euro, is the monetary authority of the euro area. We in the Eurosystem have as our primary objective the maintenance of price stability for the common good. Acting also as a leading financial authority, we aim to safeguard financial stability and promote European financial integration.
“In pursuing our objectives, we attach utmost importance to credibility, trust, transparency and accountability. We aim for effective communication with the citizens of Europe and the media. We are committed to conducting our relations with European and national authorities in full accordance with the Treaty provisions and with due regard to the principle of independence.
“We jointly contribute, strategically and operationally, to attaining our common goals, with due respect to the principle of decentralisation. We are committed to good governance and to performing our tasks effectively and efficiently, in a spirit of cooperation and teamwork. Drawing on the breadth and depth of our experiences as well as on the exchange of know-how, we aim to strengthen our shared identity, speak with a single voice and exploit synergies, within a framework of clearly defined roles and responsibilities for all members of the Eurosystem.”
I would think this sentence: “Acting also as a leading financial authority, we aim to safeguard financial stability and promote European financial integration.” gives licence to intervene in what is clearly a period of wild financial instability.
The ECB has a choice. LOLR or LOL
SCENE FIVE – Aboard the good ship Europa, caught in a storm in the Aegean Sea…
CAPT’N MARIO THE SLICK: “Me mateys, brace yourselves! Keep turning the wheel, helmsman!”
LIEUTENANT STARK (screaming to be heard over the storm): “but ze rudder is broken, Capt’n! Turning the wheel does nothing at all. And ve’re still heading for the rocks of Naxos!”
CAPT’N MARIO THE SLICK: “There’s naught else we can do, Starkey!”
STARK: “Yes there is: We need to take in the sails, get out the oars and try to row back out to open sea! It vill be hard vork, but it’s our only hope …”
KRUGMAN THE BEARDED (appearing from his luxury cabin in a comfortable toga): “And risk blisters on the crew’s hands?!?!? Nonsense! If only you’d put out more and more sails, like I kept telling you when we rounded Gibraltar!!!!”
STARK: “Sails are fine when ze winds are favourable, but when they go against us ve have to row!”
KRUGMAN THE BEARDED: You’re always preaching hardship, Stark. And I’m much more eloquent than you. Sophisticated readers of the New Roman Times know a charming Patrician when they read one!”
STARK: Zat is it! I have had enough of zis Schwachsinn! I am taking the dinghy und heading back to Germania. Ve vill return in a few generations und sack all of Lombardy und Dalmatia!!!!
(Stark hops off the side of the deck into a rowboat and rows off to safety.)
CAPT’N MARIO THE SLICK: (As if nothing happened) “Keep turning the wheel, helmsman! More sails!….
I still think it should have been 50 instead of 25.
@Gavin Kostick
“We in the Eurosystem have as our primary objective the maintenance of price stability for the common good.”
Whenever I read that, I always think to myself, “The price of what?”
@LHE
Nice one. Tres droll.
@Dork
We are bollixed.
With the greatest of respect to your sincerely held views, the above quote is one of your more understandable observations.
43 replies on “ECB Cuts the Interest Rate”
I’m surprised some people were surprised by this.
Makes no difference on a macro level – the credit supply will still contract.
Although on a indivdual level people on fixed rates will get crucified while the tracker crew will get some relief.
Super Mario very dovish. More cuts to come. He will be our new hero. No announcements on ECB ramping up measures yet though.
*DRAGHI SAYS SIGNIFICANT CUT TO GROWTH FORECASTS ARE LIKELY
*DRAGHI SEES `INTENSIFIED DOWNSIDE RISKS’
*DRAGHI SAYS INFLATION RATES EXPECTED TO FALL FURTHER
*DRAGHI SAYS RISKS TO THE ECONOMIC OUTLOOK ARE ON DOWNSIDE
*DRAGHI SAYS LOW SHORT-TERM RATES WILL HELP TO SUPPORT GROWTH
*DRAGHI SAYS HIGH ENERGY PRICES COULD DAMP GROWTH
This won’t work. There’s still too much debt. Japan tried 0% interest rates and got two decades of stagnation for its trouble.
Ultimately the ECB is going to have to start letting banks go, orderly weekend winddowns, and yes telling bond holders that they will have to accept that their bets aren’t guaranteed going to pay out anymore.
Supermarionation says high energy prices caused by super low rates won’t feed into inflation (as they won’t be measured), we’ll all just get poorer as our energy costs rise and the economy stagnates.
‘Contradiction’ removed from ECB glossary.
@ The Dork
Okay Dork, what exactly, exactly now, would you have Draghi do?
@Obsessive
You don’t get it – its us or the banks
The ECB is the banks.
Its a case of pure survival now from both perspectives
This was typical classical nonsense from Mario – when you cut your cloth collectively the surplus must flow somewhere and its to the banks.
They will try to eat their vassals as they do not know how to create wealth and have thought us over the years how not to.
http://www.youtube.com/watch?v=3Lawz8TcPig
@Gavin
Nationalise money of course – but he would be out of a job so don’t bet on it.
My bets are on Gold – its the only way they can peserve their precious debt contracts.
Otherwise they will strip the physical economy to the bone to peserve a fictional value to the currency which unfortunetly they have partially done so far.
The only way to peserve the currency is to destroy fraudulent credit – they won’t do it however – their fiefdoms are precious to them.
*DRAGHI SAYS HIGH ENERGY PRICES COULD DAMP GROWTH
The FT had a piece on this back in q1 when oil went north. Every $10 increase in the oil price reduces global GDP growth by 0.2%, I think it was .
Basically the West is tied into the system of repression in the Middle East.
Iran will never be allowed to shape events. Unless there is no choice.
From the israeli paper ha’aretz today but it’s very like the decision on whether or not to keep Greece in the EZ
http://www.haaretz.com/misc/article-print-page/decision-to-attack-iran-must-be-made-with-a-clear-mind-1.393407?trailingPath=2.169%2C2.246%2C2.247%2C
“When we stand at the crossroads we will have two options – prevention or deterrence. To launch a military offensive or to emerge from nuclear ambiguity. One way or another, all chaos will break loose in the Middle East. One way or another, all chaos will break loose in Israel. What was will be no more. A new era will begin.
So the debate we must have now is not whether to send the bombers before the sky is covered with clouds. The debate we must have is whether the Israeli government has spread a diplomatic Iron Dome over Israel, to protect it in the hour of truth. Has it moderated the conflict and reduced the occupation and stabilized the border? Has it won the world’s heart? Has it united the people? Has it prepared the homefront? Is Israel ready for a challenge the like of which it has not faced since 1948?”
@ All
listen, today is like a wet dream to the Dork. Please, for the love of all that is holy, DNFTT….
@ Dork,
He could provide funding for that tunnel under the Irish sea you are fond of. Hell, if Panama can have it’s canal…
@seafoid
Text from Blind Biddy in Damascus: “The threat is real.”
Increase in money supply might lead to increase of price of imports.
Printing euro to buy government debt (or anything else) is increasing the money supply. Oil is imported from outside the euro-area.
The combination of the two statements might be interpreted as: ECB using the ‘wall of money’ approach might reduce growth in the euro area.
@ Seafoid,
That’s a really, really scary situation. Way more so than anything to do with Greece. I suppose that’s adults in charge eh!?!?!
@Bond. eoin bond
Nikki’s French banks dumping greek and italian sov bonds by the truckload in billions?
You might be a good bit ‘off’ on democratic futures – but what’s really goin on in the day job?
@Disgruntled
Yes – notice how he talks about our oil dependency but does nothing about it – i.e. provide MONEY with no interest to goverments so that they can break their habit.
There is a reason OPEC meets in Switzerland you know………..
Yesterday the Cork Swansea ferry was put in Examinership because it takes 18,000 euros to fill the tank………
In 2006 alone we spent 50 billion on mainly useless fixed capital investment.
The Tunnel could be much less if the Geology was right and at even 5 billion a year for a decade of construction that would be 50 billion – chickenfeed compared to consumption
Airplanes needed 2 world wars and a Cold war of technological capital investment before they replaced Atlantic passenger liners…………
Zero sum Ryanairs do not create real net wealth.
“Supermarionation”. That why I like this site!
“DRAGHI SAYS HIGH ENERGY PRICES COULD DAMP GROWTH” Never!
Ok, so we substitute. “Er, with what?” Another inelastic commodity? We know it works in theory, so it MUST work in practice?
Judging by the slow incrementation of energy comments, maybe, just maybe, a nasty truth is dawning.
Brian Snr.
Mario is in a balloon and has 5 sandbags left to regulate his altitude.
He doesn’t have much to play around with, does he ?
@David O’Donnell on the effect on fuel prices of the next politically opportune war in the middle east. Many will miss the reference.
“The threat is real.”
The furious spinning (multiple unattributable sources) that has begun for war with Iran thing is indeed very frightening, but it is also fascinating how after the failure to find WMD in Iraq the justification for attacking Iran has become more psychological than physical.
Preparations for war are being explained by the “West” being afraid that Iran might want to develop nuclear weapons. It was merely a logical impossibility to prove the absence of WMD in Iraq, the new meme does away not only with the demands of logic but with the idea of actuality.
Slam dunk thought crime.
@Seafoid
The Board controls the only money in the eurosystem – if he wants to reduce our oil dependecy he gives euros to Goverments , the goverments agree to give those euros to Alstrom.
Its that simple baby.
Also from Mario, quoted by FT
One has no reason to doubt the commitment of the [Irish] government
Life in the Greater Franco-German Co-Prosperity Sphere.
Interest rate cuts are _a_ tool of monetary policy, with the aim of increasing money supply/liquidity/investment
The ECB rate is tending towards zero, and real interest rates are startlingly divergent, e.g. the 8.4% Rabo paid for some tier 1 capital (http://www.businessweek.com/news/2011-11-03/rabobank-pays-to-sell-first-basel-iii-compliant-tier-1-debt.html)
The Ecb needs to consider the _aim_ of monetary policy, and then assess its toolkit. The Germans will shriek over anything ‘unorthodox’….but if it fulfills the aim/mandate…so what ?
I wonder what precisely Draghi means by ‘a disorderly correction in global imbalances’? I think he was saying he can see one coming. I didn’t catch it all.
Likely referring to trade imbalances and associated currency oddities…if G20 didn’t have to do all this politically caused nonsense Ez firefighting…they’d have time to consider the currency oddities
As Prof Sinn stated, and here I agree with him, ECB activity will become automatically inflationary.
Anyone hear Noonan today? He’s looking for a 20 billion debt reduction apparently:
http://www.irishtimes.com/newspaper/breaking/2011/1103/breaking54.html
@Iceland Fans
IMF Survey: Iceland’s Unorthodox Policies Suggest Alternative Way Out of Crisis As policymakers continue to grapple with the problems facing the crisis-hit countries in the euro area and the clouded economic outlook for the global economy, attention has turned to Iceland, which three years ago saw its entire banking system crumble in just a few days.
http://www.imf.org/external/pubs/ft/survey/so/2011/car110311a.htm
@Desmond Brennan
‘… if G20 didn’t have to do all this politically caused nonsense Ez firefighting …
S’pose you’d prefer a dictatorship of the Financial System over the nuisance of politics, democracy, and citizenship.
a little flavour of Iceland … [for financial system spinners in particular ..
“Iceland’s heterodoxy gives us a test of economic doctrine,” Krugman said. Comparing Iceland to Ireland and Latvia (both members of the European Union), he argued that the former has fared much better than the latter in terms of growth and jobs.
And despite warnings that economic Armageddon would follow Iceland’s decision not to accept liability for the losses of private banks, credit default swaps on sovereign debt are now much lower in Iceland than in Ireland, where the state assumed full responsibility for bank losses, he said.
“Iceland has done fine in terms of regaining not total, but reasonable confidence in its sovereign debt. The idea that there would be a huge reputational penalty for allowing private sector parties to go bust and default on their external obligations has not turned out to be true.”
Another Nobel Prize winner in economics, Professor Joseph Stiglitz of Columbia University, also endorsed Iceland’s policy response. “What Iceland did was right. It would have been wrong to burden future generations with the mistakes of the financial system,” he said in pre-recorded remarks screened at the conference.
Other speakers who strongly supported Iceland’s decision not to bail out the banks included MIT professor and former IMF chief economist Simon Johnson, who also warned that the world’s financial system remains “a big house of cards.”
@all
I note that Simon Johnson has also written recently that Irish vichy_bank/sovereign debt is unsustainable …
@Philip Lane
Iceland thread on the above might give us a greek vacation for a day or so – the IMF link also includes links to the Conference Presentations etc
http://www.imf.org/external/pubs/ft/survey/so/2011/car110311a.htm
I wonder for how many more years interest rates will be below 2%. It is some crisis.
Does it matter if the interest rate falls. The rate customers have to pay on variable rates will not change. The central bank is saying it will enforce this rate cut to be passed on through some unknown means.
Using a big stick they will say “pass on the interest rate and if it costs you (the banks), sure we will bail you out again”.
And the other big news of the day is that the governments raid of peoples private pension funds to fund their folly of a jobs program has not worked as per the increase in the jobless number released today, up over 2000.
@ Damien
60% of people have tracker mortgages, and Irish Life already said they will pass on the cut to customers on variable rates too…
€71.6bn outstanding in tracker mortgages (CBI @end June). ¼% cut is a saving of €179m/year for tracker holders.
Trackers ??
You forget – the banks losses and the states are one now , its what happens when you nationalise banks & their debts while not nationalising money.
It means we are strategically tied to bank “investments” and cannot engage in a rational industrial policey until they are paid off in a few decades.
We are bollixed.
@Shay Begorrah
Most unhelpful development … but I assume, once again noting that assumptions are always dangerous, that sufficient sanity will prevail.
Its the right decision and hopefully will cause the Euro to weaken a little vs its trading partners.
Overview article from the Telegraph.
‘ECB President Mario Draghi cuts the euro’s last lifeline’
Quote:
“And while the ECB apparently sees it as not part of its job to act as lender of last resort to countries, it is perfectly happy with that position as far as the banking system is concerned. Banks were again promised unlimited liquidity by Mr Draghi on Thursday.”
The take I have at the moment is: ECB refuses to be the lender of last resort for the eurozone area – G20 turn to IMF to take up the slack.
Is that about right?
Given the track record of the IMF and ECB over the last few years, might that be a positive thing?
http://www.telegraph.co.uk/finance/comment/jeremy-warner/8868316/ECB-President-Mario-Draghi-cuts-the-euros-last-lifeline.html
By the way, here’s the mission statement of the ECB, which is admirably brief:
“The mission of the Eurosystem
“The Eurosystem, which comprises the European Central Bank and the national central banks of the Member States whose currency is the euro, is the monetary authority of the euro area. We in the Eurosystem have as our primary objective the maintenance of price stability for the common good. Acting also as a leading financial authority, we aim to safeguard financial stability and promote European financial integration.
“In pursuing our objectives, we attach utmost importance to credibility, trust, transparency and accountability. We aim for effective communication with the citizens of Europe and the media. We are committed to conducting our relations with European and national authorities in full accordance with the Treaty provisions and with due regard to the principle of independence.
“We jointly contribute, strategically and operationally, to attaining our common goals, with due respect to the principle of decentralisation. We are committed to good governance and to performing our tasks effectively and efficiently, in a spirit of cooperation and teamwork. Drawing on the breadth and depth of our experiences as well as on the exchange of know-how, we aim to strengthen our shared identity, speak with a single voice and exploit synergies, within a framework of clearly defined roles and responsibilities for all members of the Eurosystem.”
I would think this sentence: “Acting also as a leading financial authority, we aim to safeguard financial stability and promote European financial integration.” gives licence to intervene in what is clearly a period of wild financial instability.
The ECB has a choice. LOLR or LOL
SCENE FIVE – Aboard the good ship Europa, caught in a storm in the Aegean Sea…
CAPT’N MARIO THE SLICK: “Me mateys, brace yourselves! Keep turning the wheel, helmsman!”
LIEUTENANT STARK (screaming to be heard over the storm): “but ze rudder is broken, Capt’n! Turning the wheel does nothing at all. And ve’re still heading for the rocks of Naxos!”
CAPT’N MARIO THE SLICK: “There’s naught else we can do, Starkey!”
STARK: “Yes there is: We need to take in the sails, get out the oars and try to row back out to open sea! It vill be hard vork, but it’s our only hope …”
KRUGMAN THE BEARDED (appearing from his luxury cabin in a comfortable toga): “And risk blisters on the crew’s hands?!?!? Nonsense! If only you’d put out more and more sails, like I kept telling you when we rounded Gibraltar!!!!”
STARK: “Sails are fine when ze winds are favourable, but when they go against us ve have to row!”
KRUGMAN THE BEARDED: You’re always preaching hardship, Stark. And I’m much more eloquent than you. Sophisticated readers of the New Roman Times know a charming Patrician when they read one!”
STARK: Zat is it! I have had enough of zis Schwachsinn! I am taking the dinghy und heading back to Germania. Ve vill return in a few generations und sack all of Lombardy und Dalmatia!!!!
(Stark hops off the side of the deck into a rowboat and rows off to safety.)
CAPT’N MARIO THE SLICK: (As if nothing happened) “Keep turning the wheel, helmsman! More sails!….
I still think it should have been 50 instead of 25.
@Gavin Kostick
“We in the Eurosystem have as our primary objective the maintenance of price stability for the common good.”
Whenever I read that, I always think to myself, “The price of what?”
@LHE
Nice one. Tres droll.
@Dork
With the greatest of respect to your sincerely held views, the above quote is one of your more understandable observations.