I feel like a nerdy sci-fi reference is long overdue and what better way to jump into the European Union’s problems than with a reference to the best show to ever be canceled, Firefly. On the show, humanity has left earth and colonized/terraformed an entirely new solar system. The CORE planets or those closest to the star formed The Alliance, an interplanetary union. With their combined strength and technology they were able to conquer and extend their sphere of influence over the outer planets which were seen as backwaters and underdeveloped. The show takes place following the failed uprising of the periphery planets over the core planets. Our main characters are a group of outlaws who navigate the murky backwater planets while avoiding the overreaching control of the Alliance. Of course, the show takes place in this unique and strange world that has absolutely no similarities to the one in which we live today. So I actually have no idea why I even brought it up.
Seven years into the Eurozone’s depression the ECB decides to print money in a desperate attempt to buy even more time for the European Bureaucracies to sit on their hands. It’s insane to think that the politicians in charge of Europe will do anything different with the added 6 months, maybe a year of time the ECB just bought them. They didn’t do anything for the first seven years why should another year change that?
Draghi is in essence doing the classic spray and pray tactic employed my most video gamers when a random bad guy jumps out from behind a corner. Unfortunately the money he’s spraying is a drop in the bucket compared to what would really be necessary for him to blast his target of 2% inflation to smithereens. I don’t want to put a number on it, because that would be falling folly to the very same “logic” these arrogant psychopaths employ so well. Needless to say 1.1 trillion Euros isn’t enough to save the EU from itself.
If Draghi or anyone at the ECB was a student of history they’d know this. Hell, they don’t even have to be students of history. All they’d have to do is look at what is going on in Japan. Japan’s economy is 1/3rd the size of the EU. Yet the ECB is planning on printing the same amount of money per year. Last time I checked, Japan wasn’t suffering from too much inflation even with the absurd amount of money they have been printing. From a basic numbers perspective, the failure of the ECB’s action is all but guaranteed.
Perhaps the amount printed doesn’t even matter. For no amount of money can save the EU when it is this divided! Only 20% of the purchases will be shared. 20 freaking percent! This low amount of risk sharing speaks volumes about the division in the EU, which is behaving more like a confederacy of nation states than the union it claims to be. The lines are already being drawn. The periphery resents the core for harsh austerity and the core has grown impatient with the periphery’s inability to grow out of its debts. We can already see this resentment growing in the periphery countries like Spain and Greece who is on the verge of electing the uber left wing Syriza party. Everyone knows the Greek debt will never be repaid. How long till they finally act on it?