ECB board member: Euro-bashing is Anglophone overload

Germany’s man at the ECB, Jörg Asmussen, in a speech about monetary policy communication today:

For the euro area and the ECB, the situation is even more peculiar, because the influential “commentariat” comes predominantly from outside the euro area. The big English-language newspapers, the news agencies and wire services that shape opinions in the economic and financial sphere on the Continent are all writing from outside the euro area. There is, of course, nothing wrong with friendly outside advice. And I certainly do not wish to come across as whining and complaining.

But it simply remains a fact: the analysis, discourse and policy prescriptions that are propagated come from the outside. Maybe inevitably, they come with a certain disinterested detachment. As if the outside “spectators” are not affected by what is happening.

And they come with a dangerously narrow and exclusive perspective on the economics of the monetary union. But if the profound political commitment of Eurozone countries to the historical project of “ever closer union” is neglected, the assessment remains superficial and partial. And the suggested policy responses may be biased or naïve.

Why does it matter? Because the discourse influences some of the most important financial markets for the Eurozone. If expectations that have been built up are not fulfilled, if alleged certainties do not materialise, if actions from politicians or central bankers are not forthcoming as anticipated by the “market consensus”, the reaction can be grave: volatility, contagion, all the way to complete market dysfunction. The systemic impact can be major, driving financial institutions, as well as sovereign borrowers into real difficulties.

It doesn’t take much extrapolation of what he says to envisage that at least in the ECB’s mind, there is a SPECTRE-like entity of cackling pundits consisting of Paul Krugman, Martin Wolf, Simon Johnson and others, though who exactly has the white cat sitting in their lap as they press “Publish” is not specified. More substantively. there is a strange symmetry between this view and the pre-crisis gloating of the European Commission that the single currency’s American critics had been all wrong.

14 thoughts on “ECB board member: Euro-bashing is Anglophone overload

  1. Ah but it’s the fault of the cunning Blofeld that you can’t tell which one is which. Thanks to cosmetic surgery they all look alike. Recall the scene in Diamonds Are Forever where 007 kicks the wrong cat. (Krugman has a cat but she’s a Prussian blue, oddly enough.)

  2. “And I certainly do not wish to come across as whining and complaining.”

    But you do, you do.

  3. A free trade area, strictly enforced, is a very good thing.
    Ditto for free movement of people.
    A common currency is just stupid.
    The reason why isn’t that hard: the evidence is staring literally every last person in Europe right in the face.

  4. Pingback: ECB board member: Euro-bashing is Anglophone overload | A … | Forex News Blog

  5. “…if the profound political … project of “ever closer union” is neglected…”
    Good alibi for discounting, and ignoring, the extra-EZ commentary. But discounting/ignoring Optimum Currency Area Theory? That is arrogance!!
    The truth of the matter remains that one cannot achieve an end with wrongly designed means., e.g. F.Nechio of frbsf http://www.frbsf.org/publications/economics/letter/2011/el2011-18.html

  6. Interesting post again Mr O’Neill. A few points:

    “cackling pundits consisting of Paul Krugman, Martin Wolf, Simon Johnson and others”

    Well one thing that unites all these “cackling” pundits (and I include myself here) is that they are all macro economists of some kind, while the distinguishing feature of the “structural reform” advocating defenders of Troika policy is that they are largely micro economists. I don’t think this is mere coincidence.

    “For the euro area and the ECB, the situation is even more peculiar, because the influential “commentariat” comes predominantly from outside the euro area”.

    The point I would stress in all this is that the so called “anglo” societies tend to be more open about talking about their problems in public. Look at the recent lamentable Barclay’s and Bankia affairs. In the UK Bob Diamond was called to account, here in Spain it has been impossible to get the Spanish parliament to agree to even hold a commission of inquiry into what happened to Bankia, and the issue has only gone to criminal justice due to the perseverance of what could best be termed a “fringe movement”.

    The big issue that Mr Asmussen doesn’t mention is what Krugman calls the “confidence fairy”, ie the idea that many of the economic woes of the Euro Area do not have deep structural economic and demographic roots (which is what the macro set argue), but that there is a lack of confidence which leads people not to spend or buy bonds. Why there is a lack of confidence (apart from the reprehensible damage inflicted by the anglo discourse) is never very clearly explained. Actually the situation here is totally asymmetric, since I don’t think I can recall the case of a British economist or politician complaining that the woeful state of the UK economy was the result of a damaging editorial in El Pais, or Le Monde, or FAZ.

    “If expectations that have been built up are not fulfilled, if alleged certainties do not materialise, if actions from politicians or central bankers are not forthcoming…….”

    But with all due respect, and to take just one example, who built up the expectations that the last EU summit decisions would mean bond purchases to bring down interest rates, and a Spain bank bailout without passing through the sovereign? Surely he isn’t going to suggest that the whole confusion in this regard is the result of bad reporting in the anglo press?

    Basically Southern and eastern European societies have much more difficulty in publicly recognizing that something bad is happening to them. Just look how one political leader after another has lined up to say “we don’t need a bailout” the day before requesting one. Or look at the denials from the Bank of Spain that anything was badly wrong with the banks they regulated.

  7. “Basically Southern and eastern European societies have much more difficulty in publicly recognizing that something bad is happening to them. ”

    Yes. I am interested to know if you are including Germany and the Germans in “eastern European” here. This is a statement from Jorg A, star of the German financial establishment after all, not the deputy economy minister of Portugal.

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  9. Just look how one political leader after another has lined up to say “we don’t need a bailout” the day before requesting one.

    Is it surprising? Who calls the fire brigade, knowing they start by making sure the whole building’s on fire with their flamethrower in order to teach you that you only call the fire brigade once the whole building’s on fire and only then if the fire is a virtuous fire?

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  11. It is unfortunate that he cannot evaluate recommendations by their value rather than by their origin.

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