European Central Bank President Mario Draghi has bought some time for the eurozone with these comments towards the end of the week:
Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.
With those words hanging out there, Draghi now has to do something soon, but what?
While we wait, two reality checks.
One, as usual, from Open Europe:
Open Europe estimates that taking Spain off the markets for three years in a Greece-style bailout would cost between €450bn and €650bn – which is both economically and politically impossible, given that there is essentially only €500bn in bailout cash left. Instead, the most likely scenario is a combination of measures, involving a precautionary loan of around €155bn combined with more ECB liquidity. However, even that could, at best, only buy Spain six months to a year.
And another from German voters:
The Emnid poll for the Bild am Sonntag mass circulation weekly showed 51pc of Germans believed Europe’s top economy would be better outside the 17-country eurozone. Twenty-nine percent said it would be worse off, AFP reports.
Whether Germany would actually be better off outside the eurozone (as it currently stands) is a matter of considerable debate, but that even one poll can show that the country’s voters feel this way says something. German voters never wanted to replace their splendid deutsche mark with an irresponsibly speculative single currency, but they were never given a realistic chance to reject it. What they were given was lies. Thus they were lied to about whether Italy had met the supposedly tough requirements imposed on any country that wished to join the euro. And they were lied to about the potential costs of membership to the German taxpayer. Bailouts? Impossible.
Under the circumstances, it says a great deal for the caution, conservatism and, yes, “European” spirit of German voters that they have remained so loyal to this wretched money for so long. If that has changed . . .
Of course, an even more interesting question would be to ask the German voters if they favor what it would really take to preserve the euro over the longer term: a permanent “transfer regime” (a polite term for looting) and, oh yes, another thing: the gutting of their democracy.