The European Central Bank is running out of ammunition to fight a new debt crisis-(cool bank running)

https://www.theglobeandmail.com ^ | 6/20/2022 | EUROPEAN BUREAU CHIEF

[RomanSoldier19]

Almost exactly a decade ago, Mario Draghi, then the president of the European Central Bank, promised to do “whatever it takes” to save the euro from destruction. At the time, Greece was on the verge of stumbling – or being frogmarched – out of the euro zone; Italy, the region’s third-largest economy, was so mired in debt that it, too, seemed a candidate for departure.

Today, Mr. Draghi is Prime Minister of highly indebted Italy, just as a fresh euro-zone crisis may be around the corner. Inflation in Italy and the rest of the euro zone has reached painful levels, sovereign debt yields are rising, economies are going into reverse and the war in Ukraine – on European soil! – threatens to destabilize the whole region economically and politically.

Except this time, there is virtually nothing he can do to prevent another euro calamity in Italy or the European Union. That job will go to his successor at the ECB, Christine Lagarde, the former boss of the International Monetary Fund.

And guess what? The ECB is running out of ammunition to fight the next crisis. Mistakes have already been made, the biggest of which was ditching quantitative easing (QE), which is to end in July, instead of extending it.

QE is a central bank’s mass purchase of government debt and other financial assets, such as high-quality corporate bonds, in the open market to increase the money supply, bring down interest rates and encourage investment and lending. Mr. Draghi introduced QE in earnest in 2015 to help keep interest rates at or below zero and juice the economy.

[RomanSoldier19]

[EEGator]

LOL, that’s great.

[stevio]

The door slowly opening afterward is a nice touch.

[Paladin2]

Crash gonna Cra$h.

[EEGator]

It’s the perfect cherry on top.

[Tai_Chung]

It looks like plastic

[Revolutionary]

Europe is on the edge of a financial meltdown.