The Stimulus envisaged by European Central Bank chairman Mario Draghi is a capital idea, whose time has come. It has been broached over the last few years, and each time the hurdle has been that a) Germany won't allow it; and b) the E.C.B. Rules don't allow for it currently. Why not?
Those are questions to which I shall not even presuppose a response. I am sure we will hear on this issue from the authorities concerned over the coming weeks and months, as it becomes a pressing issue.
Only two years ago, I believe, there was the idea of refloating the Dexia Bank. Provided it was managed well, that would be an excellent vehicle to park the extra cash. Or maybe they could just create a new bank.
I heard recently that European banks are in the process of clearing their books of some $1.75 Trillion dollars worth of assets, and provided the European parliamentary legislators aren't too fussed, these could probably find buyers from among the Chinese and Japanese corporates and states enterprises.
Japan has a stimulus on tap, and the Chinese state coffers are said to have about $4 Trillion reserves, which could be used for shrewd investments. (Figures of the Chinese having $20 Trillion are just hyperbolic, I would assume).
Readers on my blog and Guest Book know that I have been suggesting a Stimulus for the Euroland nations for some time now. The efficacy of the Stimulus in the United States has been abundantly obvious, it has recreated lost ground and the economic Recovery has sustained so many livelihoods and created heatmaps of happiness. The taper has just created a tiny amount of pain, but it is to be hoped that the robust Recovery will strengthen further and create sufficient jobs month by month to allow for the stimulus to wind down further. Here I have suggested it should be wound down over 20 months, and not 12. I get the indication that Dr Yellen at the Federal Reserve is likely to keep her policies in tune with this suggestion.
At the time the idea of an ECB stimulus was first broached, I recall both Mme Merkel and Mme Lagarde were quite enthused. I believe the time now is just perfect for such a stimulus to be started. It may take about six months, I imagine, for all the constituent members to have their reasoned decisions to conclude that yes, it would be a great idea. Once that is conveyed to Germany, they would have considered in the meantime the insertion of a sub-section in the Treaty, authorizing such a monetary stimulus.
Everything being equal, you could see people in bow-ties and ball gowns making their way to a celebratory party. Go on, ladies and gentlemen, you owe it to yourself.
Durudarshan H. Dadlani