Mario Draghi has promised the moon. The European Central Bank’s council had better deliver on his pledge this week. If it does not, the crisis will surely escalate out of control in August or soon after.
We are beyond the point where a quarter point rate cut will achieve anything. Nor will it help to launch a fresh round of “temporary and limited” bond purchases – to use the self-defeating language that Mr Draghi is forced to utter.
The only issue that matters at this late stage is whether Germany is willing to let the ECB step up to its responsibility as a global central bank after two years of ideological posturing and take all risk of sovereign default in Spain and Italy off the table – which it can do easily enough once it stops playing politics and obeys the “financial stability” clause (Article 127) of the Lisbon Treaty.