Spread of French level of the 2012 “whatever it takes” moment - Tusk “temporarily suspending asylum rights.”
The ECB still has the genes of the very inflation-resistant Bundesbank. The bloc has been far keener than the US to resort to austerity, and its economy has failed to grow anything like as fast
Unemployment is very significantly higher. The ECB doesn’t have a full employment mandate like the Fed
Europe’s politics are not propitious for the ECB to be at all hawkish.
The economic structure of the euro zone — which forced Mario Draghi to promise to do “whatever it takes” to save the currency from its sovereign debt crisis 12 years ago — is in question again.
The spread of French over German sovereign bond yields, the market’s measure of the perceived extra risk, is at almost exactly its level of the 2012 “whatever it takes” moment.
Poland’s Prime Minister Donald Tusk — formerly president of the European Council and a great champion of the European project — created a shock over the weekend by announcing that his country was “temporarily suspending asylum rights.”
That came after Germany, the EU’s single most-important member, announced new controls on the borders it shares with nine countries.
This is hugely significant, as freedom of movement is regarded as even more of a bedrock principle than the common currency.
Ironically, in 2016, UK Prime Minister David Cameron tried and failed to win concessions on free movement from Tusk as he prepared to fight the Brexit referendum
This looks like a bad time for the ECB to try to be hawkish
John Authers Bloomberg 15 Oktober 2024
https://www.bloomberg.com/opinion/articles/2024-10-15/ecb-rates-the-sick-man-of-europe-is-europe
Mr. Tusk is the centrist politician who displaced the right-wing Law and Justice Party in elections last year to European Union applause.
Brussels criticized his announcement, citing “international and EU obligations,” but Mr. Tusk answers to Polish voters now.
A Europe of shrinking and aging populations needs more economic immigration, but voters will never support it as long as their governments can’t enforce the rules that currently exist.
Even members of the EU’s elite political club such as Mr. Tusk are starting to figure this out.
Wall Street Journal Editorial 14 October 2024
https://www.wsj.com/opinion/europe-poland-immigration-donald-tusk-european-union-b2209c5a
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