Lisa Pollack at FT Alphaville has a gem of a summary on Super Mario in Milan. I'm not going to read the whole speech and the excerpts won't probably tell you all that much but it's still amusing to read.
Now I don't quite know what Draghi really thinks. If he was fed a strong dose of veritaserum, what would he really say? That the traditional monetary transmission mechanism is broken? That we need a banking union (single supervisor); a fiscal union that can effectively prevent unsustainable budgets; an economic union that can guarantee sufficient competitiveness to sustain high unemployment; and a political union that can deeply engage euro area citizens?
That's what Mr. Draghi did say (do keep in mind that he's addressing students after all!). But this is just politically correct stuff consistent with the kicking-can attitude that policy makers have had forever. After all, is a fiscal union just one that "prevents unsustainable budgets"? We might as endorse the austerity brigade then. What about effectively transferring resources, encouraging labor mobility and broader economic integration?
Pooh, who cares. The goal of a fiscal union is to prevent unsustainable budgets. Gospel truth.
Here's the amusing thing (I have to copy and paste this in order to make you smile):
Background Blurb: If there's a father of the euro, it might well be Tomasso Pado-Schioppa who, in the early 80's recognized the inconsistency (much like the trinity) of free trade, a fixed exchange rate, independent monetary policies and free capital mobility. He also advocated eliminating the third to attain the other three.
"
Now I don't quite know what Draghi really thinks. If he was fed a strong dose of veritaserum, what would he really say? That the traditional monetary transmission mechanism is broken? That we need a banking union (single supervisor); a fiscal union that can effectively prevent unsustainable budgets; an economic union that can guarantee sufficient competitiveness to sustain high unemployment; and a political union that can deeply engage euro area citizens?
That's what Mr. Draghi did say (do keep in mind that he's addressing students after all!). But this is just politically correct stuff consistent with the kicking-can attitude that policy makers have had forever. After all, is a fiscal union just one that "prevents unsustainable budgets"? We might as endorse the austerity brigade then. What about effectively transferring resources, encouraging labor mobility and broader economic integration?
Pooh, who cares. The goal of a fiscal union is to prevent unsustainable budgets. Gospel truth.
Here's the amusing thing (I have to copy and paste this in order to make you smile):
Background Blurb: If there's a father of the euro, it might well be Tomasso Pado-Schioppa who, in the early 80's recognized the inconsistency (much like the trinity) of free trade, a fixed exchange rate, independent monetary policies and free capital mobility. He also advocated eliminating the third to attain the other three.
"
All well and good. But, one more thing…As you know, in recent months I have repeatedly stressed the irreversibility of the euro. This was precisely the sentiment of one of Tommaso’s most noted quips. Speaking in 2004 about the “EMU”, an abbreviation for Economic and Monetary Union, he remarked that it was also the name of an Australian bird rather like an ostrich. And he added: “Neither of them can go backwards”.
Clever!
Know who’s also clever? That Gary Jenkins over at Swordfish Research: Yes Mr Draghi but a cynic might say that the real resemblance between Economic and Monetary Union and an Ostrich and Emu is that it sticks its head in the sand at the sign of trouble and in its current format has little chance of taking off…"
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