But I also believe Drahgi's been looking a better means of delivering financial stimulus than the traditional sovereign debt purchases the the ECB has used thus far. To this point, QE has just been an enabler for the governments to continue with their old ways.
Draghi has pushed politicians to make the kinds of systemic changes to the conditions that have bogged down Europe - heavy regulation, businesses burdened with workplace rules and limited by Unions to restructure in order to be more competitive.
The strong dollar against the weaker Euro is giving European businesses a strong pricing tailwind, which should help them. And a dramatic drop in oil is leaving more money for consumers. But ultimately, more aggressive monitory policy is needed to really get the engine revving. Especially, now with the drag that a slowing China and Russia's collapsing economy will have on Europe.
The solution Draghi has been waiting for has come in the form of the newly elected European Union President, Juan Claude Junker. He's got the right ideas if you ask me. Firstly, Junker's stated number one priority is
"... getting Europe growing again and getting people back to work. "
Those words could have been delivered by any politician, but Junker thinks more like a capitalist than the socialists who have kept Europe in the grips of terrible economy for decades! Since taking office Dec. 10, 2014, Junker has listed clear objectives including "freeing small and medium-sized businesses from red tape, to promote entrepreneurship and job creation." He wants the commission to "focus on cutting regulation, making smarter use of existing financial resources, and making flexible use of public funds - to provide up to 300 billion Euro in additional public investment over the next three years."
Here is list of ways Junker wants this investment to be targeted:
- Infrastructure – broadband, energy networks and transport infrastructure
- Education, research and innovation
- Renewable energy and energy efficiency
- Projects to help young people find work (building on the Youth Guarantee scheme).
At a recent December press conference, Mario Drahgi announced that the ECB has just agreed to prepare "for further measures." The pundits, and even those who initially believed in Draghi seem to have written off Draghi's comments has more of the same "talk." I'm not so sure. Draghi, who earned his Doctorate in Economics at MIT, is smart enough to know when time as run out on rhetoric. Drahgi's been waiting for a man like Junker - and now he has him!
