ECB to the rescue?

What continues to amaze me is that eminent economists and political journalists as seen in Business Insider continue to adhere to the chimera that the eurozone is salvageable, if only, the latest mantra, the ECB were to start acting like a central bank and depress interest rates on peripheral debt.

Well, that isn’t the ECB’s role: if a central bank is needed, it would have to be created from scratch with a view to synchronising monetary and fiscal policy across the eurozone. In the meantime, it is no secret that I personally do not believe that the ECB can, even if it were so minded, be successful if using its balance sheet to bring down interest rates. The markets are too jittery and when panic starts, contagion follows. Too many hedgefunds are gorging themselves of country bets aswell to make this a viable option.

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