It’s not the main story of the day, but in the course of the FT’s writeup of today’s wild ride at the markets I read that “the European Central Bank said it would keep its interest rate at 1 per cent, and would not begin buying sovereign debts.”
People don’t pay as much attention to central banks as they should and people don’t pay as much attention to Europe as they should, so people in America pay almost no attention to the European Central Bank. But if you look at the criticisms that folks like Brad DeLong and other advocates of greater fiscal and monetary stimulus have been saying about the Fed, they all apply 10-fold to the ECB. Smart set commentators seem to just take it as a fact of life that the ECB is under the thumb of Germany, and that Germans are just fated to endorse catastrophically deflationary monetary policies out of a misreading of interwar political and economic history, but obviously it is possible for the ECB to decide it wants to implement aggressive growth-oriented policies. Its leaders just keep choosing not to.