“Time to stop the ECB’s monetary aid”. Weidmann helps to blow up the Euro, and we thank him for that

Interesting and important intervention by the governor of the BundeBank, Jens Weidmann, on the fiscal and monetary policy of pandemic assistance implemented to deal with the economic damage due to closedowns linked to the Covid-19 pandemic, published in the Financial Times .

Governor Buba warns that the economy risks becoming overly dependent on the massive fiscal and monetary support provided to overcome the crisis and is clearly calling for it to be terminated as soon as possible.

Weidmann also criticized the EU's plan to issue € 750 billion of new debt for its Recovery Fund, warning that it risked creating "a kind of debt illusion" because the money would not be included in national debt counts. Do you ever want some sin, ie debt, not to be registered !!!

The FT notes how his words would mark an increase in the break between countries of southern Europe, which are still suffering from the crisis caused by Covid and which started from a difficult situation, and those of the North that have suffered less damage. It must be said that the more time passes, the more it seems that this is the aim of BuBa, otherwise Weidmann, who certainly knows the data, would not express himself like this, but with expressions

European countries have significantly increased their debt levels to finance measures that protect their companies and workers from the impact of the pandemic, while the European Central Bank has bought hundreds of millions of bonds to keep interest rates low. The ECB has prepared a PEPP for 1350 billion euros which is accompanied by the TLTRO measures with resources that go directly to the credit system. Now Weidmann, who is well known for being one of the most aggressive members of the ECB's Governing Council, says these measures were justified, but " It is important that all measures, including additional ones, are clearly limited in time ."

"The state has acted quickly and comprehensively in the crown crisis," he said. “Finding out of crisis mode will be just as important. "

He continued: “ Fiscal policy should not get used to a lax course, nor should it rely on interest rates to remain so low in the long run. That is why it is important to reduce the high debt / GDP ratio after the crisis “.

Even the redundancy fund, the "Kurzarbeit", must not be excessive. In fact, if the layoffs last too long, "they could also tie workers to companies that have no future and freeze structures that are obsolete". Why is it better a free worker, unemployed and penniless, you know…. He also warned politicians against trying to “ interfere too much in corporate decisions, for example in the case of new investments ”, a problem that certainly does not concern Italy where the government's disincentive to invest is evident.

If we were convinced No Euros, we would hope that Weidmann's words would be followed by coherent steps, with the veto on the continuation of the PEPP and therefore the sale on the market of government bonds in the assets of the ECB. This, at a time when the Covid-19 crisis is still far from being overcome, would lead to an explosion of spreads, to a worsening of the economic crisis, to a dramatic spread of interests, probably to a flight of capital. towards the core of the euro area with an exponential increase in T2. All things that, if continued for a sufficient time, would lead to the breakup of the euro.

This is why Weidmann, when he speaks like this, is the greatest ally of the No Euros. Or he is simply really a No Euro too.

---

---

The article «Time to stop monetary aid from the ECB». Weidmann helps to blow up the Euro, and we thank him for this comes from ScenariEconomici.it .

---

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/tempo-di-fermare-laiuto-monetario-della-bce-weidmann-aiuta-a-far-saltare-leuro-e-di-questo-lo-ringraziamo/ on Thu, 03 Sep 2020 10:46:48 +0000.