ECB Decision: Lagarde Statement on Interest Rates, Inflation, Euro, Trad...

Protester disrupts European Central Bank press conference - as it happened

Mario Draghi’s press conference in Frankfurt briefly suspended after a protester wearing a t-shirt showing “End the ECB dick-tatorship” threw paper and confetti at Europe’s top central banker

Closing summary

ECB press conference disrupted <- details="" div="" here="" start="">

Woman arrested

Photos: Protestor throws confetti at Draghi

ECB: She registered as a journalist

Watch the protest here

LIVE Updated 4h ago

 

An activist stands on the table of the podium throwing paper at ECB President Mario Draghi, left, during today’s press conference in Frankfurt. Photograph: Michael Probst/AP


Graeme Wearden

Wednesday 15 April 2015 14.07 EDTLast modified on Wednesday 15 April 201514.10 EDT


4h ago14:05
Closing summary: Protests in the heart of the ECB


It’s time for a closing summary.

Mario Draghi’s press conference in Frankfurt was dramatically disrupted today by an activist, in a protest against the European Central Bank’s policies.

In a remarkable security breach the protestor, understood to be Josephine Witt, leapt on the desk, showering glitter on the ECB president.

She also threw leaflets condemning the “undemocratic” Bank, and its role in the financial crisis, and chanted “End the ECB dictatorship” repeatedly, before being removed by security staff.

 

A protester who jumped on top of ECB president Mario Draghi’s desk during a news conference at the European Central Bank is detained by security. Her shirt reads “End the ECB Dick-tatorship”. Photograph: Marcus Golejewski/Demotix/Corbis

And there’s a video clip here.

The press conference was briefly suspended, before Draghi returned to tell reporters that his QE programme was delivering benefits to the eurozone economy, and to call for Europe’s labour market to be reformed to help younger people.

According to the ECB, Ms Witt registered as a journalist to attend today’s press conference in the Bank’s new Frankfurt headquarters. Staff took “immediate and effective action”, it said in a statement.


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Photograph: Marcus Golejewski/Demotix/Corbis

Police confirmed that they arrested a 21-year-old woman at the scene; she was later released:

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We are all Jesuits

Derk Jan Eppink // Wed, 10. Oct 2012

There are plenty of reasons to keep a close eye on Herman van Rompuy, the President of the European Council. Early September, Van Rompuy spoke to the 'Interreligious Dialogue' in Florence. The world press did not notice, but fortunately there was still the 'Katholiek Nieuwsblad' from Den Bosch, Rome's last resort in the Netherlands. The newspaper proudly quoted Van Rompuy as announcing: 'We are all Jesuits'. He was referring to those prominent European leaders with whom he is developing the architecture for the future Europe. 'It creates unbreakable ties. So there is a 'Jesuits International''.

Who are those people that Van Rompuy, himself schooled by the Jesuits at Sint-Jan Berchman College in Brussels, was talking about? First of all, there is José Manuel Barroso, President of the European Commission. Secondly, there is Jean-Claude Juncker, Prime minister of Luxembourg and Chairman of the Euro group. Van Rompuy also mentions the President of the European Central Bank (ECB), Mario Draghi, who was schooled in the Roman Jesuit College Instituto Massimiliano Massimo. The Italian Prime Minister Mario Monti and his Spanish collegue Mariano Rajoy have also been shaped by Jesuit colleges, Van Rompuy cheerfully added. Fortunately there is Angela Merkel, the stubborn daughter of a vicar from the former DDR, to act as a counterweight.

Listening to Van Rompuy, you will instantly notice the similarities of the Jesuits with Europe. Jesuits formed the vanguard of the Catholic Church, like the European elite is the vanguard of the European integration. Both portray themselves as 'the elite', elevated above the ordinary people. Their methods are very similar. A sophisticated lie or purposeful deception is allowed when framed in the interest of the greater goal. A barely contained cynicism typifies the attitude toward the normal citizen, the ignorant fool, who within a democracy needs to be protected from himself. The Catholic and European elites work through inner circles. The rest is prose. Van Rompuy, Barroso, Monti and Rajoy are frequent visitors at papal audiences.

It is not surprising that this mentality leaves traces in the European structures and working methods. The ECB has a Governing Council of twenty three members, among which are the six members of the Executive Board. The ECB setup is hardly different from the Vatican. The Governing Council ranks no women, is not accountable to a Parliament and the minutes of its meetings are classified. The American Federal Reserve Bank and the Bank of Japan have to publish the minutes from their board meetings. The ECB plays a central role in the Euro zone, moving around billions of Euros, but no one knows how the bank in Frankfurt makes decisions. At least the Pope had a butler exposing the secrets.

Admittedly, Euro Jesuits are intellectually superior. They are way smarter than Guy Verhofstadt, leader of the Liberal fraction in the European Parliament and his Green counterpart Daniel Cohn-Bendit. In their book ‘For Europe!’ they scream their goals at the top of their lungs: a federal Europe with one government, one European tax and one army. The only thing that is missing is one secret service and one leader, so Europe is back to where it started. Put this to a referendum and the ‘United States of Europe’ is limited to Italy and Belgium.

Even sillier is the ‘final report’ of a handful of Ministers of Foreign Affairs on the future of Europe. The report is signed by eleven out of the twenty seven Member States; a minority, among them the Netherlands. The usual suspect, the UK, did not sign and neither did Sweden or Finland. Of the new Member States, only Poland signed. The conclusion of the group: ‘The Euro is the most powerful symbol of European integration’. The many rescue operations and emergency funds are conveniently ignored. Some amongst the eleven Ministers (it is not clear which ones) argue in favour of a European army. Such an army will undoubtedly be a paper tiger, because the armies of the Euro countries are shrinking rapidly as a result of the crisis. Surprisingly, Greece spends the most on its military per capita! Yet Greece did not sign. In short, these eleven ministers, like a disoriented soccer team, excel at scoring in their own net.

That is something that would never happen to the Euro Jesuits. Their report ‘Toward a genuine Economic and Monetary Union’ only consists of ‘building blocks’ and ‘suggestions’.  The report suggests implementing a European deposit guarantee scheme. Nothing dramatic of course, it is just a suggestion. In a painless exercise of words citizens are moulded into a thinking process that goes beyond them. As soon as they realise what building those building blocks are meant to create, they are already trapped in it. What used to be suggestions will be fait accompli and those who object are labelled as unreasonable and fractious, as populists.

Meanwhile, the never elected Prime Minister Monti has announced that he will start a European campaign against ‘populism’. Van Rompuy, also never elected, immediately gave him his support. Monti had earlier stated that national parliaments should not get in the way of European leaders, thereby referring to the German Bundestag. They have to be ‘educated’. Jesuits lead the people, who are in turn supposed to follow. What is populism to them? It is the ‘ignorent’ who refuses to follow: the angry Greeks, the protesting Spaniards, the concerned Germans and the Euro-critical Dutch. A Europe with such an elitist mentality needs a Reformation, but that is something Jesuits International detests. What an annoying populist he was, that Martin Luther!

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Martin Feldstein: A weaker euro for a stronger Europe

Europe's policymakers must intervene to weaken their currency

Martin Feldstein
May 12, 2014 Last Updated at 21:50 IST

Don't Invest in the Euro
The Dollar And Euro Are Doomed. These 3 Currencies Will Take Over. wallstreetdaily.com/Free-

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Despite the recent upturn in some of its member countries, the euro zone's economy remains in the doldrums, with the overall rate of annual gross domestic product (GDP) growth this year likely to be only slightly higher than one per cent. Even Germany's growth rate is below two per cent, while GDP is still declining in France, Italy and Spain. And this slow rate of growth has kept the euro zone's total unemployment rate at a painfully high 12 per cent.

Slow growth and high unemployment are not the euro zone's only problems. The annual inflation rate, at just 0.5 per cent, is now so close to zero that even a minor shock could push it into negative territory and trigger a downward price spiral. Deflation would weaken aggregate demand by raising the real (inflation-adjusted) value of household and corporate debt, and by increasing real interest rates. Lower demand could, in turn, cause the fall in prices to accelerate, sending prices into a dangerous tailspin.

There are few if any panaceas in economics. But a sharp decline in the euro's exchange rate - say, by 15 per cent - would remedy many of the euro zone's current economic problems. A weaker euro would raise the cost of imports and the potential prices of exports, thus pushing up the euro zone's overall inflation rate. Devaluation would also boost average euro zone GDP growth by stimulating exports and encouraging Europeans to substitute domestically produced goods and services for imported items. Although competitiveness within the euro zone would be unaffected, a weaker euro would significantly improve the external balance with the rest of the world, which accounts for about half of euro zone trade.

European Central Bank (ECB) President Mario Draghi has emphasised his concern that the euro's rise over the past three years has increased the risk of deflation. But it was his famous declaration in July 2012 that the ECB would do "whatever it takes" to preserve the euro that, while successful in reducing interest rates in the distressed countries of the euro zone periphery, also contributed to the euro's current strength.

Today, neither Mr Draghi's recent statements nor the prospect of an American-style programme of large-scale asset purchases (also known as quantitative easing) has caused the euro to weaken or the inflation rate to move back towards the target level of two per cent. So the operative question is how to reduce the euro's relative value while maintaining the perception of stability that Mr Draghi helped to establish in 2012.

Because quantitative easing by the ECB has been advocated as a way to weaken the euro, it is worthwhile to examine the impact of its use by the Federal Reserve on the value of the dollar and the inflation rate in the United States.

The short answer is that it did very little to affect either. The real trade-weighted value of the dollar is now at the same level that it was in 2007, before the onset of the Great Recession. It rose briefly during the peak crisis year of 2008, as global investors sought the safe haven of dollar-denominated assets, but retreated during 2009 to its previous level. The dollar's value then remained relatively stable during more than three years of quantitative easing - and actually rose during 2013, when the Fed's asset purchases reached a high of more than $1 trillion.

Of course, other factors influenced the dollar's value during this period as well. Nonetheless, the behaviour of the dollar's exchange rate during the period of quantitative easing offers no support for the proposed use of large-scale asset purchases by the ECB as a way to bring about euro depreciation.

The Fed's quantitative easing also did not cause an increase in the rate of inflation. The consumer price index rose by 1.6 per cent in 2010, when quantitative easing began, then increased somewhat faster in 2011 and 2012, before dropping back to a gain of just 1.5 per cent in 2013, the peak year for asset purchases.

If the ECB wants to reduce the value of the euro and increase the euro zone's near-term inflation rate, the only reliable way to do so may be by direct intervention in the currency market - that is, selling euros and buying a basket of other currencies. While direct intervention to weaken the euro would create challenges in other parts of the world, policymakers in the US and elsewhere should recognise the importance of a more competitive euro to the future of the European economy.

The writer is professor of economics at Harvard University.
Project Syndicate, 2014


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Let eurozone stew in its own juice

01 March 2012, Thursday

ASIM ERDİLEK a.erdilek@todayszaman.com

The two-year-old eurozone sovereign debt crisis reached a dubious milestone last week with the default of Greece on its debt to private investors, as part of the proposed second Greek bailout. But the European Central Bank (ECB) refused to accept losses on the Greek bonds it holds, creating a double standard.

Standard & Poor's (S&P) downgraded Greece's “CC” long-term and “C” short-term sovereign credit ratings to “selective default,” after the Greek parliament retroactively inserted “collective action clauses” into sovereign debt contracts of private creditors. They are forced to accept a “voluntary” bond swap whose terms mean highway robbery for them. S&P added that if a sufficient number of private creditors did not agree to the bond swap, Greece would face “an imminent outright payment default,” since it would have access to neither market funding nor official financing through its second bailout, which is conditioned on the successful execution of the bond swap (see my last column). Moody's Investors Service and Fitch Ratings are also expected to declare Greece in default. For the rating agencies a debtor is considered in de facto default when it fails to service its debt, i.e., pay the interest and the principal owed, in full and on time. European Union leaders are evidently upset with the recent sovereign downgrades of Greece and other troubled eurozone members. The European Parliament is considering a draft report to empower the EU Commission to ban issuance of sovereign credit ratings if they are unacceptable to EU members and to create a “fully independent public European Credit Rating Agency.” Since the outbreak of the eurozone crisis, Germany, the eurozone's dominant leader, has pushed the International Monetary Fund (IMF) into getting heavily involved in the bailouts of Greece, Ireland and Portugal. The involvement of the IMF, committing almost 60 percent of its outstanding loans to the eurozone, has been justified in terms of not only its independence and expertise in monitoring how well the bailed out countries meet their performance criteria but also the danger of global contagion from the eurozone crisis. The IMF, with the overrepresentation of Europe on its executive board and with previous as well as present managing directors of French nationality and as an international financial institution which capitalized on the global financial crisis of 2008-2009 to save itself from increasing irrelevance, has been only too eager to get involved. It has been not only too generous in the amounts of its loans but also too lenient in its surveillance of the eurozone borrowers, especially Greece, failing to ensure that they met their performance criteria. Its involvement in Greece's first bailout has been an unmitigated disaster. Why should we expect the IMF to do any better in Greece's second bailout? The eurozone, an inherently defective and rickety monetary union of economically very disparate countries, lacks a foundation of fiscal union and adequate intra-union labor mobility. Since the outbreak of its sovereign debt crisis it not only made feckless attempts to bail out its troubled members through the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM), but also tried to turn the entire EU into a half-baked fiscal union under Germany's tutelage. But the future of that fiscal union is now further jeopardized by Ireland's decision to hold a referendum on the European Fiscal Compact, finalized in January and already rejected by the UK and the Czech Republic. Lately, the eurozone also began to seek salvation by the ECB through the Long Term Refinancing Operation I and II. The ECB has been bailing out troubled eurozone banks with unlimited cheap three-year loans, bypassing the ban on lending to eurozone governments directly. But not content to stew in its own juice, the eurozone is seeking more financial help through the IMF from the rest of the world, arguing that otherwise its crisis could trigger another global financial crisis. That scary argument is debatable. The eurozone and the IMF, which is eager to boost its financial firepower by $500 billion to over $1 trillion and thus play an even greater role in the eurozone's salvation, have met stiff international resistance. The G-20 finance ministers and central bank governors declared after their meeting in Mexico City last Sunday that before the G-20 agrees to boost the IMF's financial clout, the eurozone should do more to help itself through its EFSF and ESM firewalls. The German government, which received parliament's approval for the second Greek bailout but now faces a potential legal obstacle put up by the constitutional court, is opposed. Its opposition, like its resistance to the issuance of eurozone bonds to mutualize sovereign debt, is on grounds of moral hazard: That would only encourage other fiscally irresponsible eurozone members besides Greece to act even more irresponsibly. But its real reason is the growing domestic opposition in Germany to throwing more money at salvaging the increasingly doubtful eurozone in its current form. If rich Germany, the largest EU economy, unquestionable leader and major beneficiary of the eurozone, is not willing to have more of its own skin in the game, why should the less rich rest of the world help any more? Source

Davos Leaders Urge Europe to Resolve Crisis Threatening the Global Economy

By Simon Kennedy and Jana Randow - Jan 29, 2012 3:00 AM ET

Davos World Economic Forum 2012

Scott Eells/Bloomberg

Donald Tsang, Hong Kong's chief executive, left, sits with Christine Lagarde, managing director of the International Monetary Fund (IMF), center, and George Osborne, U.K. chancellor of the exchequer, during a session on Jan. 28, 2012 at the World Economic Forum (WEF) in Davos, Switzerland.

Global finance chiefs warned no economy is safe from Europe’s debt crisis, adding urgency to their calls for its governments to deliver a swift resolution.

Policy makers from Hong Kong to Canada used the last full day of theWorld Economic Forum to push euro-region counterparts to boost their bailout cashpile to protect Italy and Spain. They also pressed Greece and its creditors to strike a credible agreement to cut the nation’s debt.

Failure to deliver home-grown solutions would cost Europe any chance of further outside support and undermine the International Monetary Fund’s push for more crisis-fighting resources of its own, officials said. The concern tempered optimism from earlier in the week when delegates expressed hope that Europe had succeeded in calming markets after two years of turmoil.

“I’ve never been as scared as I am about the world,” Donald Tsang,Hong Kong’s chief executive, said yesterday in Davos, Switzerland. “Nobody’s immune. You need decisive action. You need to inspire confidence.”

Bank of Canada Governor Mark Carney estimated the European crisis will subtract 1 percentage point from global growth by the end of 2012 “and that’s in a world where this crisis is contained.” Europe’s pain could be transmitted via trade or financial channels with banks already hoarding cash or investing only in domestic markets, he said.

‘Train Wreck’

Yale University Professor Robert Shiller echoed the concern by estimating the euro-area will contract this year by more than the 0.5 percent predicted by the IMF. Nouriel Roubini, co- founder of Roubini Global Economics LLC, said Greece may be forced to quit the single currency within 12 months.

“The euro zone is a slow-motion train wreck,” Roubini said.

The concern leaves the euro-area’s leaders under pressure to raise the size of their rescue funds from the limit of 500 billion euros set to take effect in July when a permanent fund comes online aside the temporary European Financial Stability Facility.

While they plan to reassess that amount in March, U.K. Chancellor of the Exchequer George Osborne indicated they may need to do so sooner by demanding steps in “the next few weeks.” EU leaders next meet in two days time in Brussels to draw up a fiscal compact to strengthen governance of the euro area.

Not Dealt With

Osborne also sided with the consensus by urging a fast accord on slashing Greece’s debts, three months since creditors agreed to implement a 50 percent cut in the face value of more than 200 billion euros of debt. Negotiations continue in Athens this week.

“The fact we’re still at the beginning of 2012 talking about Greece is a sign this problem hasn’t been dealt with,” Osborne said.

Carney said a “credible” agreement is required even if that means increasing the participation of the private sector and perhaps the public sector. Turkey’s Deputy Prime Minister Ali Babacan said Greece should be prevented from defaulting because “once that door is open” others could follow.

Policy makers from Japan and the U.K. said while they and others might add to the IMF’s coffers, a prerequisite was Europe putting up more money of its own. Absent “firm action, I don’t think developing countries like China are willing to pay more money,” Japanese Economy Minister Motohisa Furukawa said.

Little Bag

Seeking to insulate the world from Europe’s woes, Lagarde wants to boost her institution’s lending capacity by $500 billion. She made her pitch by saying the world had “never been so interconnected” and that the IMF was always repaid with interest.

“I’m here with my little bag to collect a little bit of money,” she said.

Last-minute worries took the shine off the sentiment of earlier in the week when delegates sounded upbeat about Europe’s outlook after financial markets stabilized. Market lending rates eased again this week and Italian and Spanish bonds rose as borrowing costs fell at debt auctions. At the same time, Portuguese credit-default swaps hit a record and Fitch Ratings on Jan. 27 downgraded Spain, Italy and three other euro countries.

Buys Time

World Bank President Robert Zoellick said the respite was likely temporary and linked it to the ECB last month lending euro-area banks a record 489 billion euros for three years to ward off a funding squeeze.

“I’m really glad the ECB took these actions, but let’s not be complacent,” Zoellick said. “This buys time, you still have to act.”

To contact the reporter on this story: Simon Kennedy in Davos at skennedy4@bloomberg.netJana Randow in Davos at jrandow@bloomberg.net

To contact the editors responsible for this story: John Fraher at jfraher@bloomberg.net

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Call for radical steps to save the euro

By Constant Brand - 08.12.2011 / 18:22 CET

Senior politicians say treaty change should wait until euro crisis is under control; convention needed for democratic legitimacy.

A group of senior European politicians has appealed to EU leaders to take radical steps to tackle the crisis of confidence in the euro.

The Spinelli group, which includes former prime ministers of Belgium, Italy and Greece, called on EU leaders today to take urgent action to address the euro crisis, including launching common eurozone bonds and expanding the role of the European Central Bank.

The call came as EU leaders were about to meet in Brussels to discuss changes to the EU's treaties to restore stability for the euro over the medium-term. Germany and France are pushing strongly for treaty changes, arguing that this is the only way to convince financial markets that eurozone governments are serious about tackling excessive debts and deficits.

Guy Verhofstadt, the leader of the ALDE group in the European Parliament and a former prime minister of Belgium said plans for limited treaty change would do little to solve financial aspects of the crisis.

Verhofstadt said that treaty change “was not the way forward” to ease concerns of financial markets. “We need decisive action to stop the euro crisis,” he said,

He said EU leaders should instead focus their attention on implementing five priority measures to stabilise the euro, leaving treaty change for a later date. Verhofstadt called for full implementation of reinforced economic governance rules, the creation of a European Monetary Fund, project bonds and Eurobonds, and allowing the European Central Bank to take a more active role in fighting the crisis.

Treaty change should be carried out later with the full involvement of national parliaments and the European Parliament, Verhofstadt said.

Herman Van Rompuy, the European Council president, outlined a number of options for boosting economic discipline in the eurozone in a paper sent to EU leaders on 7 December.

The options include changing a protocol attached to the treaty to tighten rules on reducing debt levels and public deficits. This method would not require ratification by national parliaments and so could be done quickly.

Verhofstadt said that changing a protocol would be a blow to the democratic process within the EU as it would exclude a role for MEPs and national parliaments. He said that treaty change should be agreed by a convention bringing together national MPs, MEPs and national governments.

Verhofstadt said the long-term solution to the crisis was political. A convention should aim “to create a federal union”, he said.

Verhofstadt was speaking after the meeting of the Spinelli group, an association of former ministers and current MEPs calling for greater European unity and a less inter-governmentalist approach to tackling the EU's problems. The group includes Giuliano Amato, a former prime minister of Italy, Costas Simitis, a former prime minister of Greece, and Joschka Fischer, a former foreign minister of Germany. Dany Cohn-Bendit, the joint leader of the Green MEPs, is also a member of the group.

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World economy on the brink: Spain and Italy key

By Catholic Online (NEWS CONSORTIUM)
11/21/2011
Catholic Online (www.catholic.org)


Prime ministers of both countries must act quickly and decisively to save the world economy.

To a very large degree, the fate of the world's economy is now in the hands of the Spanish and Italian governments. This realization comes as the European Central Bank (ECB) has stepped in to buy debt from both countries in an effort to bring down interest rates.

Only swift and decisive action can save the euro zone.


BRUSSELS, BELGIUM (Catholic Online) - Last week, Italy hit a financial barrier as its interest rates continue to climb. The European Central Bank came to the rescue, and purchased a portion of that country's debt effectively bringing down interest rates. On Thursday, the ECB did the same thing for Spain.

It is becoming clear to investors and economists however, that the intervention of the ECB will not be enough to save the European economy over the long haul. Instead, significant reforms will be necessary in both countries.

Among the reforms being called for by investors are, allowing the ECB to buy trillions of dollars in troubled sovereign debt, which will reduce the borrowing costs for both countries, and for those countries to adopt significant economic reforms.

The ECB purchase of sovereign debt strongly suggests that investors are shying away from both Spanish and Italian debt as an option. With investors shying away, neither country is able to borrow money at reasonable rates which they can realistically repay. Because most countries operate over budget, they are dependent on reasonable borrowing costs to fund day-to-day operations.

The European Central Bank's decision to purchase some of the sovereign debt in those countries is a strong indicator that they are teetering on the brink.

The news for Spain is particularly bleak. With 21 percent unemployment, the country's economy is forecast to shrink for at least the first six months of 2012. However, it's believed that Spain will elect a conservative prime minister on Sunday which will oust the Socialist government. A conservative can bring hope to a country where labor unions wield broad influence. Because the Spanish conservative party is reasonably distanced from the labor unions, it will become easier for the Spanish government to adopt critical economic reforms that can help the economy grow.
The new Italian Prime Minister Mario Monti who just replaced Silvio Berlusconi, is also expected to implement sweeping economic reforms. It is an expectation -- doing less could mean ruin for that country.

And the time is right for change, as both leaders are new and will likely enjoy their greatest degree of support at the start of their administrations. This is a key time to act, particularly since some reforms will be unpopular. If either leader waits too long, economic vagaries and declining popularity could shut the window of opportunity rather quickly.

If those windows close, both economies could fail and they will find themselves beyond the reach of help. If that happens, it will send shockwaves around the world and could spark recession even in healthy economies. Given this, investors and people the world over are looking to Spain and Italy to resolve their economic problems, before time runs out.

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