For several months, Mario Draghi, president of the European Central Bank and former vice chairman and managing director of Goldman Sachs International, had promised the financial community he would do “whatever it takes” to boost the European Union’s sagging economy. On January 22 he exceeded market expectations with a $1.3 trillion quantitative easing program that has the ECB purchasing 60 billion euros of government bonds through September of 2016 with the option to continue the purchases beyond that date.
Sold by the business media and governments as the remedy to boost economic growth, create jobs and “to see a sustained adjustment in the path of inflation” (as though costing more to live while wages decline is a positive), the plan was hailed a great success.
Whether planned or by coincidence, Draghi’s announcement was made while those who will benefit the most – hedge funds, private equity groups, venture capitalists – were attending the World Economic Forum in Davos, Switzerland. From the Alps, the comments from the richest people on earth were unanimous.
- “It’s pretty overwhelming … I think it will be effective.” George Soros.
- “We’ve seen over the last few years you have to have trust in Mario…” Larry Fink, CEO of BlackRock Inc.
- “One could argue that this type of approach Draghi is using should have been applied much earlier, which would have gotten Europe on a similar kind of platform the US was on. It’s never too late to do the right thing.” Stephen Schwarzman, chairman of the Blackstone Group LP.
Right they are!
It would be “effective,” and “the market should never doubt Mario” because “it’s never too late to do the right thing.” And “the right thing is” for central bankers around the world to print trillions of dollars, euros, yen, yuan etc., to liquefy failing equity markets.
Since the Fed began QE in the US, the Dow has soared from 8,000 to 18,000. Japan’s Nikkei jumped 57 percent from massive Abenomic’s money flows. In anticipation of having trust in Mario, the European index has hit a 7-year high. Thanks to China’s lowering interest rates and cheap money injections, the Shanghai market, having replaced Macao as the new gambling hub, went from 2,280 to 3,400, a 33 percent increase.
As the facts show, the central bank’s QE schemes have only made the richest richer while the rest of the world keeps getting poorer. According to and Oxfam International study released days before the billionaire club met in Davos, the combined wealth of the richest 1 percent will overtake that of the other 99 percent of people next year.
Yes, it’s never too late to do ” the right thing.” It’s Bankism. A top trend for 2015 and beyond.