Super More Perfectly

Mario Draghi is back to save Italy by now running it. Like Janet Yellen resurfacing at the US Treasury, these people are thought of in the most positive terms simply because the public remains blissfully unaware of basic data. Not without good reason; the public had for decades come to count on central bankers to (for all anyone knew) keep the world on track and therefore people generally believe what central bankers tell them.

And monetary policy independence has meant that officials get to self-evaluate without challenge.

For all Italians appear to know, Draghi “saved” Italy, in particular, about eight years ago. Italian borrowing costs were spiraling into the stratosphere, threatening something worse than the 1930’s for them and their Club Med neighbors, and now they aren’t. Cue up the parade, and today a likely ascent to Prime Minister who’s tasked yet again with “saving” the country.

And, for old times sake, all of Europe.

Amid turmoil from the coronavirus pandemic, the economy, and political infighting, the man known for leading Europe’s economy from crisis has been tapped to assemble a new government for Italy.

Mario Draghi, known as “Super Mario” from his time as the president of the European Central Bank, has agreed to form a new government at the request of Italian president Sergio Mattarella.

That’s what most everyone believes, a first rate hero. While yields on Italian government bonds have kept low for all these many years, was that actually the point, though? A tactic, yes, but what was the overall strategy?

It has been merely presumed, and officials have been careful not to be too specific, that the one thing equaled the real object; that by buying up a whole lot of bonds across Europe’s troubled sovereign issuers, that lowering debt rates by doing so would lead to a recovery from first 2008 and then 2011’s crisis. Not a rebound, not some reflation-ish conditions, a full recovery FULL STOP.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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