Thursday, July 26, 2012

Draghi: "Whatever It Takes"

After his Le Monde interview the other day, Mario Draghi is back, this time speaking to the Global Investment Conference in London, where he said that the ECB will do "whatever it takes" to preserve the euro:
«All'interno del proprio mandato, la Bce è pronta a fare qualunque cosa per preservare l'euro, e credetemi, questo basterà».
And his words were not without effect: spreads on Italian and Spanish bonds immediately decreased. Perhaps investors missed the phrase "within its mandate." German public sentiment has rapidly hardened against "doing whatever it takes," and it remains to be seen how free a hand Draghi actually has. The speech received a lot of play in Italy (which is why I'm quoting from the Corriere della sera) but none at all in France. The imminence of doom has apparently sharpened Italy's focus. France is still preoccupied with internal problems.


Mitch Guthman said...

Just like Ben Bernanke who is always telling us he’s “prepared to act” but never does. Draghi could put an end to the euro crisis right now. He has an unlimited supply of euros and could backstop Italy and Spain by acting as the lender of last resort (which would drive down borrowing costs). Why doesn’t he? How much worse do things have to get before he acts?

Anonymous said...

Mr Goldhammer,

I think you have a lot of interesting things to say about the French political scene. However, I think you should translate the French quotes you provide (and more recently, Italian quotes) because I imagine a lot of people who want to find out how things work here don't speak French (or Italian). (I speak both, so I'm not talking about myself.)
Jason from Uzes

Art Goldhammer said...

Jason, thanks for the suggestion, but I already put in as much time on this blog as I can afford, and translating would take too much additional effort. There is always Google Translate, which is good enough to give an idea of what is being said to those who can't manage the original.

bert said...

There's a link between market movements and Draghi's comments, is there? Even if it's causation rather than coincidence, a one-day rally is essentially noise.

As is the phrase "whatever it takes" unless accompanied by, you know, actual action. It's acquiring a familiar ring.

bert said...

Blogger rewrote my link, it seems.
The link searched google for "whatever it takes" + euro, and excluded results from the last couple of days. Olli Rehn, Barroso, Schaueble, van Rompuy, etc ... They all used the phrase. No doubt to stirring effect.

Art Goldhammer said...

When it comes to stirring, Draghi has a bigger ladle than the rest. Nevertheless, I agree that noise is noise.

Mitch Guthman said...

France 24 has good coverage of the speech in both English and French.

The clip on the English page is in English (Draghi delivered the speech in English).

FrédéricLN said...

Georges Ugeux thinks Mr Draghi's declaration is un coup de pétard mouillé :

"La Banque Centrale Européenne peut être éminemment utile pour faciliter la liquidité des marchés obligataires souverains et bancaires." (liquidité - not solvency, in Mr Ugeux' mind).

"La BCE a probablement épuisé les moyens dont elle peut disposer pour assister les pays en difficulté."