ECB sends stock markets soaring
Share prices soared on Thursday in reaction to the ECB's announcement that it will launch a multi-billion euro bond-buying programme. Meanwhile the euro dropped below 1.14 against the dollar. This trend will help the export trade, some commentators write jubilantly. Others see the Eurozone on its last legs now that the ECB has been forced to resort to the only instrument left at its disposal.
Exports benefit from low euro
It is still unclear to what extent the ECB's bond purchases will stimulate the economy, but what is certain is that the drop in the euro exchange rate will give export trade a significant boost, the liberal daily Turun Sanomat believes: "So far the ECB has kept the key interest rate at just above zero and maintained a negative interest rate on deposits, but it still hasn't been able to stimulate inflation and growth. It's too early to say whether the massive bond purchases will accelerate growth in the Eurozone. But we've got no other means at our disposal. What is certain is that the slide in the euro exchange rate will increase the competitiveness of export firms. In Finland economists at the OP Bank raised the growth prospects for Finland on Thursday. The reason: things are looking up for exports."
Draghi's money gives crisis states a respite
The conservative daily The Times welcomes ECB chief Mario Draghi's announcement: "It is the right course and has been carefully designed. Unfortunately it is late and it will not on its own cure Europe's malaise. The eurozone's flagging economy needs radical restructuring. At least the new approach announced by Mr Draghi may provide a respite from the pressures of austerity and deflation. ... Greater stability will in principle help eurozone governments in what they really need to do to secure long-term economic growth: cut costs, reduce welfare bills, free up labour markets and make it profitable for businesses to invest. QE cannot create sustainable growth: it is a means to an end."
An anti-depressant for Europe
The ECB's decision could rouse Europe from its lethargy and help it to start seeing the many political and economic crises as an opportunity, the conservative weekly Weekendavisen writes: "Naturally there is a risk that Russia could fall into a black hole. But if we weren't so depressed we would come up with a solution instead of just despairing. Of course the unemployment rate in southern Europe is scandalously high and Greece is in a terrible state. But if we hadn't been so down in the dumps we could have done something about it. ... If you only see darkness and despair you paralyse yourself. ... The ECB's decision gives the responsibility to the governments of the individual states. This would be a good opportunity to take an objective look at what can be done to encourage Europeans to face the future with realism and hope."
ECB giving speculators more money to play with
The ECB's quantitative easing programme is neither necessary nor effective, the liberal-conservative daily Neue Zürcher Zeitung writes and warns of dangerous side effects: "The extra liquidity pumped into the financial system will only intensify excesses on the stock markets and real estate markets, while the interest rates that have slipped into the negative range in many states have definitively lost their controlling function. Speculators looking for short-term profit will be delighted to receive more play money from the ECB, and so will states that are unwilling to reform like France or Italy, for whom extra time has been bought although this will hardly encourage their willingness to reform. But the impression is growing stronger that with its monetary activism the ECB, rather than being the solution, is quickly becoming part of the euro problem."
Euro finance system on the verge of collapse
After the failure of the austerity policy, the ECB's decision in favour of quantitative easing now points to a complete collapse of the European financial system, the left-leaning weekly magazine Politis comments: "In fact the central banks are the last bulwark in a system on the verge of collapse. ... The last protective wall will certainly cave in. The private banks that have recognised the dire state of affairs have pulled out of the real economy and are emptying their coffers by distributing extensive dividends and bonuses. The states have no answer to the escalating indebtedness other than budget cuts. And what will the ECB do with the debt it purchases when the states can't buy it back? Mario Draghi's latest announcements mark the start of the final round."