Thursday, September 22, 2011
Marshall Auerback: The ECB v. Germany
By Marshall Auerback, a portfolio strategist and hedge fund manager
I’ve been in Amsterdam and met some people very well connected with the ECB. The topic de jour is the apparent split between the Germans and the ECB, especially in light of the resignation of Jürgen Stark last week from the ECB executive board. This has been a move hailed as a German protest of the errant ways of the ECB, andStark is now touting his conservative ideas around Europe in a hope to undermine the central bank’s current interventions. That’s the public line.
But the people to whom I’ve spoken here contend that Stark’s resignation does reflect the reality that the Germans are losing out as far as the ECB goes. The profound objections to what the ECB is becoming on the part of Germany is also accompanied by a realisation that it is the only supranational game in town and has little choice but to take on this quasi-fiscal function that it is now undertaking.
Stark (and Weber before him) had no desire to associate themselves with this but the resignation reflects the view that they were powerless to stop it.Most of the ‘blame the Mediterranean profligates rhetoric we’ve been hearing has been diversionary, to draw local attention away from the fact that Germany’s hardcore Bundesbankers are losing this battle. .
The pan-Europeanists are the ones who will support a coordinated response to financial issues, not coincidentally because this will be the only way to retain existing benefit levels once some sovereigns and the banks exposed to them go soft.
Stark’s replacement, Asmussen, is an SPD guy and even though he makes all of the same hawkish noises, he’s not as hard-line as Stark. It was also indicated to me that if Germany were to go for the Hans Olaf Henkel proposal of a DM bloc (to which I alluded in an earlier post), it would screw the French totally and they won’t stand for it.
Keep reading this interesting article here
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