Architect of Euro and ECB Warns of Imminent Crash
Oct. 16, 2016 (EIRNS)—Otmar Issing, the first chief economist of the European Central Bank (ECB) and an architect of the single currency, has told the Sunday Telegraph’s international business editor Ambrose Evans-Pritchard the the entire euro system is on the edge of collapse, and that it was fatally flawed from the inception, because it was betrayed by political considerations.
“The Stability and Growth Pact has more or less failed. Market discipline is done away with by ECB interventions. So there is no fiscal control mechanism from markets or politics. This has all the elements to bring disaster for monetary union.”
He told Evans-Pritchard that “The no bail-out clause is violated every day,” and the “ECB has crossed the Rubicon.” He described the ECB purchasing of junk bonds as something that would have “been unthinkable in the past.”
Issing blasted the handling of the Greek debt crisis, starting in 2010, arguing that Greece should have been kicked out of the euro, and given “generous support” once they restored the drachma.
Evans-Pritchard noted that Issing delivered a comprehensive deconstruction of the euro and the ECB in an interview recently published in the quarterly Central Banking Journal, "Otmar Issing on Why the Euro House of Cards Is Set To Collapse." He warned that the ECB and the euro will try to muddle through from crisis to crisis, but that cannot go on for long.