A month late, I learn from brilliant economist Simon Wren-Lewis about the 3.5 year late revelation of the utter contempt that then European Central Bank President Jean-Claude Trichet had for Democracy.
I hand the microphone over to brilliant economist Paul DeGrauwe
The ECB’s letter to the Spanish government is not the only one the ECB sent to Member States’ governments. A similar letter was sent to the Italian Government. The letter is of great significance because it reflects the ambition of the central bank to determine macroeconomic policies in the Eurozone. This ambition should be checked, for two reasons.
First, the letter illustrates the intensity of the micro-economic management the ECB intends to apply in crisis countries. The letter contains a detailed list of what according to the ECB needs to be done in the labor market. Thus, collective agreements should be abolished and should be organized at the level of the individual firms. In addition, these agreements should not contain indexation clauses, even when these are entered into freely.
I am shocked and shocked that I am shocked. I should have known that Democracy is optional. Needless to say, third world countries are used to having policy dictated by lenders, in their cases usually the IMF. Also needless to say, I have often wondered if I live in one (I live in Rome). Well now I know.
I am a bit amazed by DeGrauwe’s ability to be diplomatic. He warned the ECB to cease and desist noting the risk that their independence might be endangered by their contempt for Democracy.
I’d be more inclined to call for a Democratic revolution starting tomorrow in Greece.