Currency

Draghi drags the euro to centre stage again

All eyes will be on the Euro as European Central Bank president Mario Draghi promises to drag his long-awaited blueprint to save the single currency kicking and screaming in to the open.

Many expect Thursday’s announcement to amount to nothing more than yet another false dawn in the dark and dingy recent history of the euro.

the expectation is for Draghi to tell the world about that the ECB will purchase sovereign debt in the eurozone. effectively setting up a paperchase swapping good money for bad.

Investors, speculators and economists will hang on his every word and inflection to dividne what he is really saying.

Of course, the world has been here before many times.

Euro on the brink…again

The Eurozone has teetered on the brink for much of the last two years, and has slowly but dramatically declined, sinking under the icy waters like a doomed, holed Titanic.

The comparison stands up well. Neither the Titanic or euro were designed to be lost under the waves, but everyone knows what happened to the ship and the world can see the euro gradually submerging.

Draghji has the support of the Bank of England and the Federal Reserve, with both considering further stimulus measures to boost the UK and US economies, while Fed chief Bernanke is promising he will do what it takes to get the job done.

Unfortunately, the obvious has been stated many times.

If the heads of central banks and politicians both knew what to do and had the will to act on their decisions, they would have done so long ago.

Is the ECB impotent?

The first decision in a crisis is whether to do something or not – and many of them seem to have taken the easy way out – do nothing and see what happens.

The smart money says that whatever Draghi says won’t change a lot.

No country or group of countries has enough money to buy their way out of debt.

The givers are not willing to bankroll what they see as profligate spenders – take Germany’s view of Greece and Spain.

The takers are hanging on by their fingernails wielding the cudgel of ‘pay up or we’ll leave the eurozone’ to try and intimidate the bigger players.

The problem is no one really cares.

Draghis almost standing in the silent corner of an empty stage. What he says is mostly window dressing because he and the ECB are impotent. The real power lies with their paymasters, and the world is looking to Germany not the ECB to see what happens next.

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