Do people understand that the European economy is being held hostage?
Mario Draghi is the president of the European Central Bank. He can print money. He can lower interest rates. He can fund banks. He can comfort investors. He is perhaps the only person on the planet who, with a few words, could mostly end the euro zone's crisis. But he refuses to say those words. And that's because he doesn't want to end the crisis. He wants to keep it going.
That's a hell of a charge to lay at Draghi's feet, but Ezra makes it for the following reason:
To be fair to Draghi, he's not just a sadist. His view is that if the ECB steps in to save the day, the euro zone won't make the structural reforms necessary for its future. Pain and terror are leverage to force member countries to make tough decisions, like handing more authority over their budgets to Brussels, or forming a banking union. Which is why, despite the fact that Europe is in vastly worse shape than the United States and facing a looming recession, Draghi refused to cut interest rates below one percent yesterday. He wants to keep the pressure on.
In other words, Europe has to BURN TO THE GROUND before it can be repaved and rebuilt. If the ECB actually fixes the problem, Europe won't learn nothin'. Of course, millions of lives will be disrupted and billions lost in euros, but I guess some eggs have to be put into a railgun and fired into to sun in order to make some omelette du fromage.
Mario here could end this crisis at any time by cutting interest rates. He won't.
Oh, here's the best part in relation to our own little economic quiche here:
There are some in our central bank who agree with this vision. Richard Fischer, the president of the Dallas Federal Reserve, argues that the Federal Reserve shouldn't be stimulating the economy and keeping interest rates so low because that takes pressure off of Congress to cut the deficit. If the Fed let interest rates rise, Fisher says, then Congress would better see the cost of its borrowing and choose to fix it.
Sure they will. Of course, the deficit will immediately fail to matter should Romney take office. You'll see a stimulus program in the trillions before next Easter.