European Central Bank Does Nothing

A blog about business and economics.
Nov. 8 2012 8:05 AM

European Central Bank Does Nothing

154666730
Mario Draghi, president of the European Central Bank, speaks to the media on Oct. 24, 2012 in Berlin, Germany

Photograph by Sean Gallup/Getty Images.

The European Central Bank did its special thing today where it holds interest rates steady even though the economic situation has deteriorated.

They've pulled this kind of stunt so frequently that it's now customary to leap immediately to the sophisticated reasons for this (Greek elections, Spanish politics, etc.) but I think it's worth dwelling a bit on the naive view that this is a mistake. When you're driving a car, you have to turn the steering wheel when the road turns. You drive straight when the road is straight. But each particular possible orientation of the road is associated with a correct orientation of your wheels. You don't just let the road veer left and shrug, thinking that it's not your role to bail out low-quality road design.

Advertisement

The ECB is playing a more complicated game than old fashioned "loose money to counteract downturns, tight money to counteract inflation" monetary policy. And you have to ask yourself: Is it working? Has this delivered prosperity? Made European politics work better? I don't see it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

The Ludicrous Claims You’ll Hear at This Company’s “Egg Freezing Parties”

  News & Politics
Jurisprudence
Sept. 30 2014 2:36 PM This Court Erred The Supreme Court has almost always sided with the wealthy, the privileged, and the powerful, a new book argues.
  Business
Moneybox
Oct. 1 2014 8:34 AM Going Private To undertake a massively ambitious energy project, you don’t need the government anymore.
  Life
Atlas Obscura
Oct. 1 2014 10:32 AM The Corpse-Lined Hallways of the Capuchin Monastery Catacombs
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Oct. 1 2014 10:44 AM Everyone’s Favorite Bob’s Burgers Character Gets a Remix You Can Dance to
  Technology
Future Tense
Oct. 1 2014 10:27 AM 3,000 French Scientists Are Marching to Demand More Research Funding
  Health & Science
Bad Astronomy
Oct. 1 2014 7:30 AM Say Hello to Our Quasi-Moon, 2014 OL339
  Sports
Sports Nut
Sept. 28 2014 8:30 PM NFL Players Die Young. Or Maybe They Live Long Lives. Why it’s so hard to pin down the effects of football on players’ lives.