ECB: an outright or moot strategy? (FT)
Draghi's strategy to contain the euro zone debt crisis, despite the intentions may be outright, the reading may be questionable (moot). A detail of language, which James Mackintosh points in the FT. But a giant detail. Draghi's strategy is neither consensual nor solve the root of the problem, nor its application can be enforced without proving to be a mutually assured destruction. And the worst is that the experiment has been tried a year ago and went wrong. It went out with Berlusconi.
| FT: |
|
"Wednesday's leaks about the European Central Bank's plan to save the euro contained two vital pieces of information. The first is that unlimited bond purchases will be sterilised to avoid an inflationary increase in the money supply. This is a sop to Germany, but pointless as long as the ECB lets banks borrow as much as they want. The second is the name: monetary outright transactions, or MOOT. It is an appropriate name for a questionable strategy. There is no doubting the ECB's power to keep short-dated bond yields down, if it is willing to spend freely. What is questionable is whether it can stop spendthrift governments using the cash to ease the pain of their austerity-weary voters." |
| source: ECB's questionable strategy to save euro | FT |
