ECB Stands Pat as Eurozone Continues Recessionary Slide

A blog about business and economics.
Jan. 10 2013 8:42 AM

ECB Stands Pat as Eurozone Continues Recessionary Slide

European Central Bank president Mario Draghi arrives on December 17, 2012 at the EU Headquarters in Brussels for monetary discussions with Members of the Committee on Economic and Monetary Affairs of the EU Parliament.

Photo by GEORGES GOBET/AFP/Getty Images

I've often been critical of St. Louis Federal Reserve Bank President James Bullard, but as I today watch the European Central Bank issue yet another statment of no policy change even in the face of deteriorating economic conditions, my thoughts turn to some wise remarks he made last weekend in San Diego.

His point was that there's a striking contrast between Mario Draghi's willingness to get involved in some very unorthodox measures related to government finance in Spain and Italy and his seeming indifference to the idea that eurozone monetary policy ought to try to stabilize aggregate demand. Draghi's done a lot of unusual, fairly activist things to "help solve the eurozone crisis" in other words but he hasn't been willing to do the banal things that central bankers do keep economies out of recession. And yet, even though such measures would hardly solve every problem in Spanish labor markets or Italian demographics of Greek governance, they'd certainly help ease the pain a bit. And standard plain-vanilla monetary stimulus would be especially helpful for the "good students" of austeritynomics like Ireland and Latvia who desperately need assurances that there will be external demand even as the domestic population cuts back.


Now Bullard had a very strong very about the impropriety of the OTMs and such. I think the results speak for themselves in terms of Draghi's extraordinary measures. But where Bullard's right is that there seems to be a need for a "back to basics" approach. The eurozone, as a whole, is in recession conditions. Central bankers are supposed to have something to say about that in terms of monetary policy.

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



The Self-Made Man

The story of America’s most pliable, pernicious, irrepressible myth.

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

Does Your Child Have “Sluggish Cognitive Tempo”? Or Is That Just a Disorder Made Up to Scare You?

The First Case of Ebola in America Has Been Diagnosed in Dallas

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


Mad About Modi

Why the controversial Indian prime minister drew 19,000 cheering fans to Madison Square Garden.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Don’t Panic! The U.S. Already Stops Ebola and Similar Diseases From Spreading. Here’s How.

Parents, Get Your Teenage Daughters the IUD

The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  News & Politics
Sept. 30 2014 6:59 PM The Democrats’ War at Home Can the president’s party defend itself from the president’s foreign policy blunders?
Sept. 30 2014 7:02 PM At Long Last, eBay Sets PayPal Free
Sept. 30 2014 7:35 PM Who Owns Scrabble’s Word List? Hasbro says the list of playable words belongs to the company. Players beg to differ.
  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.
Brow Beat
Sept. 30 2014 4:45 PM Steven Soderbergh Is Doing Some Next-Level Work on The Knick
Future Tense
Sept. 30 2014 7:00 PM There’s Going to Be a Live-Action Tetris Movie for Some Reason
  Health & Science
Medical Examiner
Sept. 30 2014 6:44 PM Ebola Was Already Here How the United States contains deadly hemorrhagic fevers.
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.