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Main focus of Friday, September 7, 2012

Turning point in ECB policy

"The euro is irreversible", Draghi stressed after the ECB governing council's meeting. (© dapd)

The ECB decided on Thursday to help financially weakened euro countries with unlimited purchases of government bonds provided the latter submit to the terms imposed by the euro bailout fund. Advocates of the decision express delight that an EU institution is finally taking an effective measure against the debt crisis. Critics say the ECB is rewarding unstable economies and overstepping its competencies to an unacceptable extent.

Libération - France

Euro rescue becomes reality

The rescue of the euro can finally get underway, the left-liberal daily Libération writes jubliantly in the wake of the ECB's decision: "For four years the euro rescue has resembled a trailer for a film that's never released. So often promised and programmed, it has been postponed again and again. It's not clear whether posterity will remember September 6, 2012, but it is certainly possible. In Frankfurt it was not a 'black Thursday' but a day of hope, or rather of immense relief. ... In economics it's the central banks that have the greatest dissuasive force. But they have to want to make use of it. This time the message is clear: Anyone who speculates 'without good reason' against a member of the Eurozone will suffer immediate losses. The single currency is no longer protected merely by a barricade of paper, but by a financial power equipped with almost nuclear capacities!" (07/09/2012)

Jornal de Negócios - Portugal

ECB finally deploys heavy artillery

Mario Draghi has finally pulled out the heavy ammunition, the liberal business daily Jornal de Negócios comments, praising the ECB president: "Yesterday trumpets could be heard. There were celebrations. … What the ECB has done it has done well. Today, still hung-over from the party, it returns to the front. The austerity dictate continues. The war is still being fought, but the generals have now deployed the heavy artillery. The experience of several years of frustration urges caution in our analyses, particularly since there are still plenty of uncertainties. … The good news is that perhaps things won't get worse. The financial markets will finally have a counterweight on the market: the bottomless reserves of the ECB. … For Portugal this could be excellent news. … Grazie Mario, for doing what others neglect to do: your duty!" (07/09/2012)

Il Sole 24 Ore - Italy

A new foundation for a solid euro

Finally the ECB is putting the euro on a solid foundation, the liberal-conservative business paper Il Sole 24 Ore writes but warns that the stringent terms of the rescue programmes could have a paralysing impact on economies - which would play right into the hands of the programme's only detractor: "Draghi yesterday not only redressed the failures of the past three years in European policy, he also laid a new foundation for giving the single currency a more solid structure and a credible and stable future. ... Now it's up to the governments to act. … But paradoxically, now that the situation has relaxed, the crisis states are reluctant to use the European safety net for fear of the harsh conditions attached. Perhaps however it was the intention all along to threaten to put the ailing states under European supervision, so as to move them to make the necessary reforms and budgetary adjustments. … In the end this was precisely Germany's hope: that it would be able to spare itself the expense of boosting the bailout fund by forcing austerity on its partners." (07/09/2012)

Süddeutsche Zeitung - Germany

Basing the Eurozone on breach of contract

A euro community based on repeated breaches of agreement is built on precarious foundations, warns the left-liberal Süddeutsche Zeitung in the wake of the ECB's decision: "Saving the euro at any price could spell economic disaster; this is one red line that must not be crossed. The other is the legal boundary: in a community based on law it may never be said that the end justifies all means. ... The history of the past three years of euro bailouts is a history of breaches of contract - and now things are to continue along the same lines? Above all it is unacceptable for the ECB to impose itself as a secret, or more precisely a sinister ruler in Europe. It cannot and should not be tolerated that an institution with no democratic legitimacy decides over living conditions in Europe, or that ultimately it will be irrelevant how the German Constitutional Court rules next week or what the Bundestag decides. The thought that the ECB will simply print more money if the rulings and laws don't suit is simply unbearable." (07/09/2012)

Hospodárske noviny - Slovakia

ECB unhinges the market economy

If the ECB steps in to help poorly managed economies it will have nothing to do with the market economy, the business paper Hospodárske writes: "'Do as you like, and if it goes wrong we'll help you out', is how the ECB's decision could be interpreted. The markets' reaction was only logical: general rejoicing and soaring share prices. ... Draghi's decision may help to calm the situation in the Eurozone. After all, plenty of people had complained that neither the politicians nor the ECB were taking action against the crisis. ... Countries like Slovakia however, which are thrifty and comparatively responsible in their economic management, could get the feeling that they've been betrayed by the ECB. People like to say that capitalism and the market economy are synonyms. But when the financial markets punish irresponsible countries and the ECB rushes to their aid, a free market economy is nothing but a dream." (07/09/2012)

Večer - Slovenia

Banks benefit, not the citizens

The ECB's decision will only increase the suffering of those living in the crisis states, the daily Večer contends: "Bank bosses and speculators have been given new fuel to continue their game. Of course Mario Draghi didn't say that at the end of the meeting. But he did point out that the people of the countries whose bonds the ECB will purchase will have to put up with even harsher austerity measures. ... The money press will work at full tilt to produce new euro bills which will line the pockets of the top bankers and speculators. Businesses that should actually be creating new jobs will cut production and lay off staff. Unemployment and poverty will increase among the masses - and with them the danger of a social time bomb." (07/09/2012)

La Vanguardia - Spain

When crisis countries break their word

ECB chief Draghi made clear on Thursday that the European Central Bank will only purchase the bonds of struggling countries that submit to the stringent controls of the European bailout fund. But what happens if states fail to fulfil their obligations is unclear, the liberal daily La Vanguardia notes: "There are important aspects to be clarified. For example the question of what happens with the ECB's purchases if a country that has benefited from them doesn't adhere to the terms. Or if it is incapable of normalising its financial situation. Draghi would then be obliged to close the tap (as he pledged yesterday), which would renew doubts about a collapse of the euro. Or he must relax the terms. This is a question that will have to be tackled later on once it's clear whether the ECB's plan will be enough to resolve the Eurozone crisis." (07/09/2012)

Politiken - Denmark

Super Mario can't save economy

The unlimited purchase of the bonds of distressed countries will merely give the Eurozone a reprieve, the left-liberal daily Politiken writes, calling on the euro states to take resolute action: "Above all one must remember that 'Super Mario' may be able to save the euro in the long run, but not the European economy, which is currently in a profound recession. To save the economy Europe's politicians must turn their attention to growth rather than austerity. And for Europe the prospects are dismal in this respect. Europe, including [non-euro] Denmark, is caught up in a vicious circle that is only worsening with the never-ending austerity plans. It will take supermen and superwomen who take new steps for the economy to begin growing again. Unfortunately so far nothing has been seen of such leadership qualities." (07/09/2012)

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