Ecb Is Now Europe’s Anchor

The European Central Bank is making its reputation at this time of turmoil and crisis. Barely a month after the rejection of the European Union Constitution in France and the Netherlands, the EU Summit in Brussels ended in a surprisingly acrimonious orgy of national egoisms and no deal. Then the terrorists struck in London. With all this trouble, the ECB is showing itself to be an “anchor of stability” by steadfastly sticking to its mandate of insuring price stability. 

Europe suffers from a profound crisis of confidence. Its economy, for example, cannot recover properly because consumers, lacking confidence in the ability of their political leaders to solve the economy’s manifold economic problems (budget deficits, pensions, etc.), are saving for a rainy day they feel is just around the corner—and businessmen are reluctant to invest, because they don’t trust government to make the necessary economic reforms.

The public’s lack of confidence in the EU’s political leadership is totally justified. Instead of actually doing something constructive about Europe’s essential problem --reforming expensive welfare states to ensure global competitiveness--Europe’s political leaders are hiding behind straw man arguments about “ultra liberal Anglo Saxon models,” and pressuring the ECB to lower interest rates as if European economic weakness were Frankfurt’s fault.

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.

required

Log in

http://prosyn.org/A7G6E1q;
  1. An employee works at a chemical fiber weaving company VCG/Getty Images

    China in the Lead?

    For four decades, China has achieved unprecedented economic growth under a centralized, authoritarian political system, far outpacing growth in the Western liberal democracies. So, is Chinese President Xi Jinping right to double down on authoritarianism, and is the “China model” truly a viable rival to Western-style democratic capitalism?

  2. The assembly line at Ford Bill Pugliano/Getty Images

    Whither the Multilateral Trading System?

    The global economy today is dominated by three major players – China, the EU, and the US – with roughly equal trading volumes and limited incentive to fight for the rules-based global trading system. With cooperation unlikely, the world should prepare itself for the erosion of the World Trade Organization.

  3. Donald Trump Saul Loeb/Getty Images

    The Globalization of Our Discontent

    Globalization, which was supposed to benefit developed and developing countries alike, is now reviled almost everywhere, as the political backlash in Europe and the US has shown. The challenge is to minimize the risk that the backlash will intensify, and that starts by understanding – and avoiding – past mistakes.

  4. A general view of the Corn Market in the City of Manchester Christopher Furlong/Getty Images

    A Better British Story

    Despite all of the doom and gloom over the United Kingdom's impending withdrawal from the European Union, key manufacturing indicators are at their highest levels in four years, and the mood for investment may be improving. While parts of the UK are certainly weakening economically, others may finally be overcoming longstanding challenges.

  5. UK supermarket Waring Abbott/Getty Images

    The UK’s Multilateral Trade Future

    With Brexit looming, the UK has no choice but to redesign its future trading relationships. As a major producer of sophisticated components, its long-term trade strategy should focus on gaining deep and unfettered access to integrated cross-border supply chains – and that means adopting a multilateral approach.

  6. The Year Ahead 2018

    The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

    Order now