Tuesday, June 28, 2016

Draghi Worries About EU Growth

Mario Draghi, the head of the ECB (European Central Bank) seems to have, finally, noticed the absence of economic growth in the European Union.  Yesterday, he called on the EU to "co-ordinate" economic policies. Mainly, he called for more government spending by everyone.  With deficit/GDP ratios all well above one throughout the European Union, Draghi seems to think the Greek example is the one to follow.

Draghi concludes that reform hasn't worked.  One wonders what "reform" Draghi is referring to.  Perhaps in his own country, Italy, the law that makes it illegal to fire an employee might be considered for review.  If companies can't fire people, why would a company ever rationally hire anyone?

Meanwhile, Spain's economic growth of 0.7 percent this quarter is the strongest economy in the EU.  Little matter than Spain's unemployment rate remains well above 20 percent.  As long as the bureaucracy and the wealthy are doing well, why worry?

Anyway, Draghi himself is doing fine.  As he moves around Europe in jets, limousines and six star hotels, he muses over the absence of more big government spending, not even mildly concerned about the ever-exploding sovereign debt levels that sooner or later will bankrupt every EU country.

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