Mr Draghi, you’ve failed –the ECB can’t keep financial & monetary markets alive


The first chart shows that the real GDP of the Eurozone only maintained the positive but weak growth in 2010-11, whereas it kept plummeting in 2013. It is assumed that in 2014 we will see positive growth (?).

ECB euro 1

The chart below shows that the weak growth led to an unemployment rate in historical highs.

ECB euro 2

We can see the ECB’s asset level (i.e. the basis of the monetary expansion) in the monetary and financial arena. We can see in the following chart that these assets have deflated as if it were a soufflé.

ECB euro 3

The consequence of the fall in assets is that the ECB has failed in keeping the financial and monetary market alive. The monetary offer M3 doesn’t seem to be in a hurry. There is an unhealthy correlation between the ECB’s balance and the deflation threatening us.

ECBeuro 4

However, inflation is dangerously decreasing –even though some politicians deny it (e.g. Mr Guindos, who denies the decrease and its threat.)

ECB euro 5

A recessive GDP, an inflation that drops alarmingly, an unemployment rate in historical highs… all this should lead to a stronger effort by the European authorities so as to combat it. Especially when the exchange rate is so high (see the price euro/dollar.)

ECB euro 6

The fast increase in the euro’s balance of payments versus other countries shows that there is an extreme weakness in the domestic demand of the eurozone. The external surplus is due to a huge contraction of investment inside the euro, and it is invested on third countries (when the reality shows that we really need that investment.)


ECB euro 7


 The European authorities should be ashamed. Especially when we see the absolute failure of the fiscal austerity policy, which has only deepened the Eurozone’s debt to 92% of the GDP.

ECB euro 8

About the Author

Miguel Navascués
Miguel Navascués has worked as an economist at the Bank of Spain for 30 years, and focuses on international and monetary economics. He blogs in Spanish at: http://

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