The New World Ordoliberalism, Part 7: To QE, or Not to QE, That is the Ominous Question
As the European Central Bank (ECB) continues to wrestle with the decision of when and how quickly to wind down its quantitative easing (QE) program while inflation remains stubbornly below the 2 percent target and likely to stay well below 2 percent for the foreseeable future, it’s worth noting that there’s a new nightmare to add to the equation: The euro has surged in value this year, a move that not only depresses exports in recovery economies like Spain and Portugal but also depresses inflation. And one of the things holding down the value of the euro is the ECB’s QE program. So if the ECB tapers off the QE too early and quickly it’s going to make an overly-strong euro even stronger while dragging inflation even lower, potentially derailing fragile recoveries in the austerity-inflicted member states. And that means not sending the wrong signals is a key goal of the ECB is things are going to go smoothly. Guess which signals are being sent.
The New World Ordoliberalism Part 6: The QE Taper Caper and the Portuguese Squeeze
In this chapter of our exploration of what’s wrong with the eurozone we’re going to take a look at the evolving nature of the European Central Bank’s (ECB’s) quantitative easing (QE) program. Specifically, how the QE program was facing a set of obstacles that was going to require some tweaking to the program and how the solution to the obstacle was to basically choose the tweaks that harmed the weak, in particular Portugal. In favor of Germany, of course. Keep in mind that Portugal recently formed a left-wing anti-austerity government and has done relatively economically well since coming into power . Also keep in mind that Portugal is one of the few eurozone nations not facing a rising far-right “populist” movement as a response to its harsh austerity program. So you might say the timing is “right” for some preferential treatment of Portugal. Preferentially bad treatment.
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