A short while ago, in a continent not too far away ...
It is a period of sovereign debt. Rebel central bankers, striking from a hidden base, have won their first victory against the evil Austerity Empire.
During the coordinated liquidity action, Fed spies managed to steal secret plans to the Empire's ultimate weapon, the Rate Hike, a monetary supply tool with enough power to destroy an entire planet.
Pursued by the Empire's sinister agents, Princess Liquidity races home aboard her Prius, custodian of the Keynesian plans that can save her economy and restore growth to the eurozone ...
Well, we know who Senator Palpatine is in the eurozone story. He appears all affable and diplomatic and friendly and it's just a cover for being a Sith Lord. It's Mario Draghi.
Draghi looked like he'd be a good fit with the ECB. Today he comes out with this (via Guardian):
Mario Draghi told the European parliament that he would like to see a strict "fiscal compact", binding euro member-countries' tax and spending plans.
Then, and only then, Draghi suggests, "other elements might follow".
Apparently the dedication to price stability lasts only until every eurozone member does exactly what the ECB approves of. Then it can help out. The draconian mandate is like the dark side and some people can't help but be lured by the power that it offers.
This austerity kick is really getting tiresome.
If you want an example of how stern austerity measures work on a struggling economy look to outside the eurozone to the Unites States and the United Kingdom. Both had low rates and very easy monetary policy. One went for immediate austerity and one went for a more balanced approach. One economy is growing and one is double dipping.
There isn't anyone reading this column (and that includes anyone from Germany or China) whose history does not include massive debt and wars and economic booms. This goal of spending only what you earn is a pipe dream. What if companies only sold to people that paid cash and met a reserve requirement? You're telling me that the X-Wing Aerospace company didn't do a lot of financing to the Rebel forces?
And to those who say it's unsustainable – everything is unsustainable. Every government, company and even philosophy is unsustainable.
Europe made the big mistake of letting Greece into the euro. Now it's trying to impose the conditions on every economy that should have been a requirement before entry. You can't do what you should have done in the first place to fix a problem. It's like burning a timeout early in a game and then refusing to call one with a minute left and you're in the red zone.
Maybe Andy Reid can replace Draghi.
(I'm sure there are those who have a better Star Wars intro to the global economic situation. If you do, I highly recommend The Star Warns Crawl Creator.)