The European Central Bank Fiddles While Rome Burns

To some people, the European Central Bank seems like a fire department that is letting the house burn down to teach the children not to play with matches.

So wrote Jack Ewing in the New York Times last week. He went on:

The E.C.B. has a fire hose — its ability to print money. But the bank is refusing to train it on the euro zone’s debt crisis. The flames climbed higher Friday after the Italian Treasury had to pay an interest rate of 6.5 percent on a new issue of six-month bills . . . the highest interest rate Italy has had to pay to sell such debt since August 1997 . . . . But there is no sign the E.C.B. plans a major response, like buying large quantities of the country’s bonds to bring down its borrowing costs.

Why not? According to the November 28th Wall Street Journal, “The ECB has long worried that buying government bonds in big enough amounts to bring down countries’ borrowing costs would make it easier for national politicians to delay the budget austerity and economic overhauls that are needed.”

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About Giorgio Bertini

Director at Learning Change Project - Research on society, culture, art, neuroscience, cognition, critical thinking, intelligence, creativity, autopoiesis, self-organization, rhizomes, complexity, systems, networks, leadership, sustainability, thinkers, futures ++
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