The European Central Bank (ECB) announced the injection of up to €1 trillion by buying government bonds worth up to €50bn (£38bn) per month until the end of 2016. The injection of “fresh” money is called Quantitative Easing (QE), a measure adopted by U.S. and Britain in the last years. According to the economists, creating new money to buy government debt should reduce the cost of borrowing and stimulate spending by companies (new investments) and consumers.
They aim at stopping the increasing deflation trend (negative inflation) that is hitting the Eurozone and raise the inflation rate from the current 0.7% towards 2% percent. Deflation creates the danger that growth would stall after a period of anaemic recovery since the second term of 2013 (0.2% average).
Recovery is not sustainable
This announcement is a confession by the EU authorities that the economic crisis falls short from being resolved and more years will be needed to fix economy. Now they say the results of QE will be felt only in two years.
As a top European Central Bank (ECB) official said to Reuter’s agency: “We can’t do everything for Europe, we did our part, others have to do their part.” According to him, “the political foundation of the European project is being weakened.”
The problem is that the drug could kill the patient. If the already indebted governments borrow money by selling bonds their debt will grow even more and they will be tied to the ECB rules, which means the German banks rules. It’s a never-ending spiral of debts that could only buy limited time for the governments, allowing them to apply the true measures that could “end” the crisis.
What is behind?
At the same time, the ECB President Mario Draghi, wrote for the WirtschaftsWoche magazine saying that reforms were needed to raise competition, cut bureaucracy and improve labour market flexibility.
This is the “part” that “others have to do”. Raise competition is a euphemism for dropping wages, cut bureaucracyfor sacking of public servants and improve labour market flexibility for increasing precarious work, zero-hour contracts, casualisation and so on.
It’s what the International Monetary Fund (IMF) called structural reforms in its 2014 World Outlook. It’s an evidence that the ECB is nothing more than a puppet of the IMF, which is run to defend the American imperialism interests, and that there’s only one way the capitalists and their governments envisage to get out of the economic crisis: attacking deeper and deeper the working class, their wages and rights. And mainly the most vulnerable: women, immigrants, blacks and the youth.
On the other hand, the EU shows to the working class that there is only one way out for the workers: fighting this war machine against the workers called EU, organising the working class to destroy it and calling the workers all over Europe to fight together their governments, the EU and American imperialism.