[credit provider=”ECB” url=”http://www.ecb.int/press/tvservices/webcast/html/webcast_120906.en.html”]
Time is out with a poll for its annual Person Of The Year award.Some of the names on the list include:
- Barack Obama
- Psy (The Gangnam Style guy)
- Chris Christie
- Sandra Fluke
- Meg Whitman
- Undocumented Immigrants
- Marissa Mayer
- Mohammed Morsi
- Pussy Riot
- Hillary Clinton
The correct answer for Person of The Year, however, is Mario Draghi (who is listed as a candidate).
To understand why, you need to really see one Venn Diagram and one chart.
Here’s the Venn Diagram, which was made by @pawelmorski on Twitter, and which applies to Eurozone solutions. There didn’t appear to be anything that could possibly work which the Germans wouldn’t veto out of hand.
[credit provider=”@pawelmorski” url=”http://www.twitter.com/pawelmorski”]
But contrary to expectations and popular belief, it’s been an extroardinary year of progress in Europe
That’s best seen by looking at a chart of Italian 10-year bond yields, which have diminished massively.
[credit provider=”Bloomberg” url=”http://www.bloomberg.com/quote/GBTPGR10:IND/chart/”]
So how did Draghi do it?
Two programs: The first was the 3-Year LTRO (which was announced right around this time) which funded the banking system. The second was the far more dramatic OMT program, which established that if requested, the ECB could buy bonds of Eurozone member countries to reduce borrowing costs.
OK, so the ECB had a good year, but Person Of The Year?
There are two reason it’s appropriate. One is that the Eurozone is a gigantic economic zone, and in its own right, preventing a full-on political/social/economic crash is an important accomplishment.
But beyond that, the actions that Draghi took were history-changing.
The Eurozone was constructed with one gigantic flaw. A unified monetary system without a unified Treasury didn’t work. Draghi took a huge step towards fixing this this year, changing the trajectory of one of the world’s most important economic and political entities on the globe and in history.