ECB’s Mario Draghi’s Baptism of Fire: Surprise Interest Rate Cut

You’ve just got to love how predictable welfare state politics operate.

Yesterday I pointed out that the global Banking cartel has intensified lobbying for the European Central Bank (ECB) to conduct more asset purchases or Quantitative Easing (QE)

Goldman Sachs alumni now ECB President Mario Draghi in his first meeting gave them an indirect platter—interest rate cuts using the Greece political drama as well as a potential Greece exit as an excuse!

From Bloomberg, (bold emphasis added)

The European Central Bank unexpectedly cut interest rates at President Mario Draghi’s first meeting in charge after the prospect of a Greek exit from the euro region sent bond yields soaring in Italy and Spain.

ECB officials lowered the benchmark interest rate by 25 basis points to 1.25 percent, confounding 51 of 55 economists in a Bloomberg News survey. Four predicted a quarter-point move and two expected a half-point reduction. The euro fell almost a cent to $1.3729 and the yield on Italian 10-year bonds retreated to 6.14 percent after surging to a euro-era high this week.

“The ongoing tensions in financial markets are likely to dampen the pace of economic growth in the euro area in the second half of the year and beyond,” Draghi said at a press conference in Frankfurt today.

European leaders last night raised the prospect of the 17- member area splintering, with France and Germany saying they would treat Greece’s surprise referendum on a second bailout as a vote on its euro membership. With the region’s economic slowdown deepening and investors growing increasingly concerned, the ECB was under pressure to reverse this year’s two rate increases.

Global financial markets just love it when they are being pampered…

Artificially manipulated low interest rates (premised on the “euthanasia of the rentier”) and quantitative easing (premised on “parting with liquidity”) translates to inflationism as opium to the political and banking-financial elites. Of course there is a third one: socialization of investment (bailouts).

How these elites love Keynesian policies of redistributing or diverting resources from the poor to the rich. (Wall Street Occupy people, where are you?)

US and European equity markets immensely applaud on ECB Draghi’s surprise cut.

Well I may be getting quite ahead of myself, ECB’s Draghi’s baptism of fire looks like a precursor to what the global banking elite has been asking for. Take it one step at a time.