The Angry German Press Reacts To Draghi's QExtension
Back in March, when the ECB unexpectedly announced it would begin buying corporate bonds, while the German population was rather angry, its media was furious. The best example of the fury came from Germany’s Handelsblatt, which in an article titled “The dangerous game with the money of the German savers”, the authors provide a metaphorical rendering of what is happening in Europe as follows:
The publication also painted a caricature of the man behind Europe’s monetary policy:
Fast forward to yesterday, when Mario Draghi once again infuriated the Germans by announcing the ECB would extend its QE program until the end of 2017, purchasing a modestly lower €60 billion starting in April through December (with the option to expand it should the economy falter again), but what Germany heard was “more, more, more money printing”…. and reacted.
As a result, Germany’s favorite tabloid Bild, once again slammed Draghi on Friday and asked “when does Draghi’s money bomb go off?” with a picture of the Italian’s face on a bomb with a lit fuse.
The ECB has previously infurated Germany having spent more than €1.4 trillion euros buying bonds and is at risk of running out of things to buy. As shown previously, following yesterday’s revised purchasing schedule, the ECB is set to surpass the Fed as the central bank with the largest balance sheet in the world in 2017.
Germany’s Bundesbank argues that this blurs a legal line and amounts to financing of government budgets, which would go beyond the remit of the central bank. Yesterday Buba’s Weidmann said he disagreed with Draghi’s extension of Qe.
German Finance Minister Wolfgang Schaeuble echoed Weidmann’s sentiment, and called on the ECB to start unwinding its expansive monetary policy.
Then the press got involved:
“The ECB chief is again putting billions at the disposal of crisis countries,” added Bild, which during the euro zone crisis gifted Draghi a spiked Prussian helmet from 1871 to show its confidence the Italian would adhere to German-style discipline.
Cited by Reuters, Markus Soeder, finance minister in the conservative southern state of Bavaria, said the extension of the ECB’s low interest rates and asset purchases sent the wrong signal to countries in the south of the euro zone, especially Italy.
Soeder told the Funke Mediengruppe newspaper chain: “Savers and owners of life insurance in Germany are paying the price for the reform sloppiness with interest losses in three-digit billions.” Did they forget to BTFD?