Submitted by Taps Coogan on the 28th of July 2019 to The Sounding Line.

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Sean Corrigan, director of Cantillon Consulting, recently spoke with CNBC about the corner that the ECB has chased themselves into after years of more-or-less failed monetary stimulus.

 

Sean Corrigan:

“I think (the ECB) are desperate. I mean, they’ve chased themselves into an alleyway from which they know they can’t withdraw. If they were to say ‘Look sorry, the last ten years has been a failed experiment and we can’t possible continue for the next ten years, which is what interest rates are predicting, we are going to go back to something very different,’ they’re frightened of the dislocation. And as we know in asset markets, we’ve built ourselves into pricing structures which rely upon this nonsense being perpetuated.”

Question:

“…It is easy to criticize central banks, but where would the economy be if Draghi had not made (the ‘whatever it takes’) speech in 2012? Where would the Eurozone be? Where would European banks be if they had not stepped in…?”

Steve Sedgwick:

“…What did people do before they did this when they had an economic crisis?”

Sean Corrigan:

“Yeah exactly. For all our years of history, we’ve only ever perpetuated crises by smoothing them out and allowing them to be chronic rather than acute, since the rise of the grand-central-bank-technocracy that we now live in. You talk about banks. Look at the capitalization of the European banks. They’re where they were when the ECB was first instituted. They’re lower today than compared to the pre-crisis peak… I think American banks have outperformed European banks by a factor of three, in their own currency admittedly…”

“…The mandate is either shamanism, because 2% is a made-up number by the Bank of New Zealand and the Bank of Canada in the 1980s and it has no bearing on all economic structures and all economic situations in all perpetuity, or is disingenuous. Because they can’t hit it, they can do all these other interactions which, as you say, are stitching the politics of the Eurozone together and not solving the economic crisis.”

There is a bit more to the interview, so enjoy it above.

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