angela merkel

From FT Alphaville

1. The central bank bashing doesn’t start and end with Bernanke.

Central banks just about everywhere make fantastic political punching bags, and the popularity of this tactic is growing. For example

FRANKFURT — As the eurozone crisis shows signs of heating up again, political leaders are once more looking to the European Central Bank for help.

Indeed they are:

François Hollande, the front-running Socialist candidate in the French presidential election, said on Monday the European Central Bank should have intervened “massively” by lending directly to eurozone countries to save Greece and counter the sovereign debt crisis.

This particular election campaign-driven episode was sparked by Nicholas Sarkozy breaking his “no ECB bashing” pact with Angela Merkel over the weekend.

Even Australia’s central bank, whose board could be forgiven for thinking they were showing admirable restraint by “taking away the punch bowl”, is being roundly beaten up by everyone from TV presenters to union leaders to, er, former political advisors for daring to wait for inflation data before deciding on an all-but-certain rate cut.

Which takes us to the next (possible) trend:

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Ralph Atkins

Fittingly, at the end of a career spent managing global economic crises, Jean-Claude Trichet’s farewell party took a dramatic turn in Frankfurt late on Wednesday.

Trichet and Draghi at the Alte Oper. Image by Getty.

Trichet and Draghi at the Alte Oper. Image by Getty.

As Europe’s statesmen - including Germany’s Helmut Schmidt and France’s Valéry Giscard d’Estaing - paid tribute to the departing European Central Bank president in the city’s Alte Oper, Nicolas Sarkozy in Paris suddenly announced his intention to gatecrash the festivities. Despite his wife just giving birth, the French president jumped on a plane to Frankfurt.

As the farewell ceremony drew to a close, Mr Trichet – along with Angela Merkel, German chancellor and Mario Draghi, the new ECB president – headed for two hours of emergency talks on the latest eurozone rescue plan in a backroom in the grandiose 19th century opera house. Read more

Ralph Atkins

It is a fair guess that the European Central Bank is seriously alarmed by an apparent u-turn in Berlin on International Monetary Fund help for Greece. As the FT is reporting, an IMF bail-out is now not being ruled out, if only because German law and public opinion might prevent a European solution.

An IMF rescue would amount to a big rebuff for the ECB, which has repeatedly warned against any involvement beyond technical assistance. Its objections are partly about prestige: the fund’s involvement would suggest the eurozone was incapable of resolving its own problems. But the Frankfurt-based central bank has other, practical objections. An IMF bail out would involving surrendering control over the crisis, which would reduce the European Union’s influence over events in Greece. There is also the question of whether the IMF would be able to provide sufficient funding to solve Greece’s problems. If it had to ask eurozone countries for additional help, we would be back at square one. Read more

Ralph Atkins

Germany is losing the PR battle over trade imbalances, writes Ralph Atkins of the Financial Times Read more