MacroScope

ECB’s Draghi gives Germans “perverse” lesson

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When Mario Draghi, the president of the European Central Bank, told Der Spiegel magazine at the end of last year that “there was this perverse Angst” in Germany that things were turning bad, he caused an outcry in  German media, already suspicious of his policies. What had perhaps slipped by Draghi is that the English word perverse can also mean kinky in German.

Was his outburst really helpful, a German journalist queried during the monthly press conference on Thursday, and the Italian tried to set the record straight.

Scrambling for the right sheet of paper, he started: “First of all, … if I can find the actual definition of perverse in English I’d be very glad, but as usual … anyway there is a difference between perverse and perverted.” The whole room burst into laughter.

“There was a misunderstanding,” Draghi said and explained that he was referring to the German Angst of inflation, which clearly had not materialised as a result of the ECB’s recent policy.

There was another Angst, he continued, turning serious. “That’s the Angst of people who have their pension plans being reduced in capital value by the very low level of interest rates. That’s different thing, that’s a serious problem,” he said.

Austerity fatigue – the financial world’s latest fad phrase

From the U.S., we’ve had lots of talk of tapering. In Europe, the latest fad phrase in the financial world is “austerity fatigue”.

It’s a strange euphemism, somehow disconnected from reality. More than 19 million euro zone citizens were out of work during May, roughly equivalent to the combined populations of Belgium and Austria. Youth unemployment is on the wrong side of 50 percent in Greece and Spain.

Fatigue here really means growing desperation, a public railing against rounds of budget cuts and rocketing unemployment in euro zone countries.