German version
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| Joint ovations for the European Anthem, from left to right: Christine Lagarde, Emmanuel Macron, Angela Merkel Mario Draghi with wife, Sergio Matterella, Ursula von der Leyen, Volker Bouffier Source: ECB |
On the occasion of Mario Draghi's
farewell as President of the European Central Bank (ECB),
distinguished guests from the worlds of politics and business will
pay their respects in Frankfurt am Main. A great deal of gratitude is
due to the man who allegedly saved the €uro from destruction. The
event gives the observer a deep insight into the internal mechanisms
of the European bureaucracy, but it does not provide any information
on how things are going to go on in monetary matters in Europe.
The European Central Bank in Frankfurt
am Main has never experienced anything like this before. Three heads
of state and government of European countries, an elected President
of the European Commission and a designated successor to the
President of the ECB will meet in Frankfurt am Main on the premises
of the European Central Bank in order to bid farewell to its current
President at the end of his normal term of office.
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| Volker Bouffier, Angela Merkel, Mario Draghi Source: Thomas Seidel |
This raises
protocol questions. Mario Draghi himself greets the highest
dignitaries at the entrance to the building and walks them along a
blue carpet, as if the ECB's landlord were at eye level with these
ladies and gentlemen. Of course, the President of the ECB is the top
representative of a very independent EU institution, and one can even
say that it is the only EU institution that really works effectivly!
But is a central bank president who is not directly legitimised by a
democratic election really so on an equal footing with heads of state
and government? The honour of this parade for the outgoing President
of the ECB and the special gratitude expressed in the speeches of the
protagonists paint a different picture.
Draghi is rightly praised for being a
deeply convinced European who has practiced the more than two
thousand year old brace of a common European understanding of culture
to this day. One rightly admires the fundamental knowledge of the
economy and, more importantly, the ability of Draghi to convey this
to less economically educated decision-makers within the framework of
global contexts. Draghi is rightly revered as the saviour of the
€uro, if one wants to believe in the solitary integrating power of
the common currency without the banking, capital market and fiscal
union. But it is precisely the achievement for which Mario Draghi and
the Central Bank Council like to praise themselves the most today,
the creation of over eleven million jobs in Europe, that is
influenced by so many other factors outside the ECB that the concrete
share of monetary policy in it is rather difficult to discern.
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| Christine Lagarde has much to do Source: ECB |
Mario Draghi leaves a very difficult
legacy to his successor Christine Lagarde. The ECB has now bought so
many government bonds indirectly, and continues to do so, that some
countries are no longer able even to issue more debt obligations.
This will inflate the ECB's balance sheet for decades to come. Most
€uro member countries will not be able to pay back their debts in
generations to come, and for political reasons most will not want to.
The ECB's purchase programme and the flooding of banks with money
have destroyed the interbank money market in the long term. Nobody
knows how this can be repaired! Zero interest rates or even negative
interest rates, that has been learned from Japan since 1995, lead to
nothing, except to the artificial respiration of already dead
branches of the economy, which one simply does not want to let die
for the sake of political opportunity. Inflation targets are
imaginations. When Wolfgang Schäuble (former minister of finance in
Germany) once wanted to know from Mario Draghi where the prayer
mill-like repeated formula of "knapp unter zwei Prozent"
(which in English can only be murky expressed as "below but
close to two percent") comes from, his answer is supposed to
have been: "der Otmar wars" („this was Otmars definition“
meaning the former German chief economist of the ECB Otmar Issing).
In fact, inflation has not disappeared. It is taking place to an
alarming extent on the stock and real estate markets. There, new
speculative bubbles are forming unrestrainedly, which, as in the last
financial crisis, can burst at any time. However, since their values
are not included in the current consumer-oriented definition of
inflation measurement, many people do not really perceive inflation,
although, subjectively speaking, many things are becoming much more
expensive. In fact, over the past eight years the ECB has solved
fewer problems than it has moved them elsewhere. Christine Lagarde
can now devote herself to all of this for the next eight years, as
long as day-to-day political events allow time.
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| Handover of the Central Bank Council meeting bell. Mario Draghi claims not having used it even once in all eight years. As in the poem by Edenhall, Mrs Lagarde: Don't ring the bell! Source: ECB |
Something else has been made in this
event even more obvious. You can feel how the European institutions
and bureaucracies really work. A small, fine elite of very
well-trained and well-paid people has already developed there, who
can easily communicate with each other in many languages. This group
of people prefers to remain among themselves and is moving ever
faster away from the everyday reality of the people who ultimately
finance this elite through their daily work. But the distances to
each other are getting bigger and bigger. This is an important reason
for the developing populism everywhere in Europe. There the tribunes
of the people speak in the language of ordinary people and like to be
heard quickly. One of the most important tasks for the new President
of the ECB, Christine Lagarde, will be to put this communicative
imbalance back on track. Only if people understand why a central bank
acts as it does will they perhaps feel well looked after under the
symbol of the single currency.
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| At least the heads of state are well protected! Police in front of the ECB building Source: Thomas Seidel |
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