Stocks surge higher this morning across the globe after European Central Bank (ECB) President, Mario Draghi, pledged to intervene in the eurozone and correct government borrowing rates, saying, “The ECB is ready to do whatever it takes to preserve the euro, and believe me, it will be enough.”
This runs counter to the earlier interpretation of the ECB’s mandate that held that such intervention is direct governmental support, which the central bank is barred from engaging in. But Draghi says high borrowing rates are now preventing the organization from carrying out its designated task of controlling inflation, trumping the narrower reading of the mandate.
Draghi, after curiously comparing the eurozone to a “bumblebee” in transition to becoming “a real bee,” attempted to allay doubts about the relative strength of the eurozone:
“The euro-era is much, much stronger than people acknowledge today. Not only if you look over the last 10 years, but also if you look at it now, you see that as far as inflation, employment, productivity, the euro-era has done like or better than the U.S. and Japan. Then the comparison becomes even more dramatic when it comes to deficit and debt. The euro-era has much lower deficit, much lower debt than these two countries.”
And he offered a way forward, as well:
“The only way to get out of this present crisis is to have more Europe, not less Europe. A Europe that is founded on four building blocks: a fiscal union, a banking union, a financial union and an economic union.”