What the ECB is doing, in essence, is setting itself up as the shadow government of Italy, Spain, Portugal, and perhaps Ireland. If the governments of those countries do what Draghi wants, Draghi will provide them with generous subsidy. If the governments of those countries don't do what Draghi wants, he'll use a monetary laser to destroy their budgets. Fear will keep the peripheral states in line.
Wednesday, September 5, 2012
Yglesias on the ECB
Matt Yglesias accuses Mario Draghi of preparing a massive power grab: