Photo: AP/Riccardo De Luca
MARIO DRAGHI, president of the European Central Bank, should probably not open the German papers this morning. Nearly all of them are highly critical of the ECB’s plan, unveiled on September 6th, to start a process of buying the government bonds of peripheral euro-zone states, as long as they have subjected themselves to some kind of politically-approved rescue programme.”A black day for the euro, and for all of us,” thunders Bild, Germany’s biggest-circulation daily. “The ECB is standing the euro rescue on its head—those who need rescuing are calling the shots…. No, Mr Draghi, this is how to make the euro sick, not healthy.”
“The good news,” says Munich’s Süddeutsche Zeitung, “is that the floodgates have not been opened completely,” since the bond programme is conditional. The bad news is that by calling the euro “irreversible” Mr Draghi is proposing a euro rescue at any price: “that crosses a red line.” A euro based on a breach of the European Treaty is on shaky ground, says the paper. “It is unacceptable for the ECB to appoint itself the secret, or rather not-so-secret, ruler over Europe.”
The Frankfurter Allgemeine Zeitung says that so long as the ECB willingly assumes the role of sweeper, to make up for the political failure of those who should be rescuing the euro, it will be unable able to exit from the bond purchase programme. “There is no borderline any more between monetary and fiscal policy.”
Another daily, Handelsblatt, takes Mr Draghi to task for saying that the ECB has given the governments a framework and set them a “parcours” as if they were circus ponies. “Is that appropriate language for an unelected official?”
But Handelsblatt does reckon that the ECB’s announcement has taken some of the tension out of an eagerly awaited decision next week. On September 12th, Germany’s constitutional court, is expected to pronounce on the legitimacy of the proposed €700 billion European Stability Mechanism (ESM). “If the ESM doesn’t fly,” says Handelsblatt, “then at least the ECB’s bond programme will.”
If Mr Draghi opens any German newspaper at all, then it should be the daily Berliner Zeitung, or its sister publication, the Frankfurter Rundschau. Economics editor Robert von Heusinger, ever the contrarian, lavishes praise on Mr Draghi and his vision. “September 6th 2012 should go down in the annals of the United States of Europe,” he begins. “Without the courage and vision of Mario Draghi the days of the euro would be numbered and with them those of a unified Europe.”
Mr Heusinger compares Mr Draghi’s bold step with that of Alexander Hamilton in 1790, when he mutualised the debt of America’s disorderly rabble of states despite the absence of a political union.
“The ECB has the unbelievable advantage that it can literally print the money that it has committed to the unlimited purchase of bonds. In that way it can stand up to any speculative attack and win.” Mr Heusinger rebuffs the three main objections raised in Germany to Mr Draghi bold plan: that it will lead to inflation; that it lies outside the ECB’s mandate; and that there is no quid pro quo. All wrong, says Mr Heusinger.
But there is a noisy current of opinion in Germany that suggests the ECB will get a rough ride in the next few weeks. The endemic fear of inflation, stoked by 20th century experiences, cannot be banished by simple promises that the ECB will soak up the billions of euros that it is creating. Mr Draghi may have bought some time, but in less than a week Germany’s constitutional court could put the markets in a tizzy again.
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