ECB President Lagarde has been “too little too late” when it comes to inflation

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BrusselsReport.eu
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ECB President Christine Lagarde (Copyright: Brinacor, CC BY-SA 4.0 , via Wikimedia Commons )

By Spanish economist and entrepreneur José Ramón Riera

According to Eurostat, Eurozone inflation continues to increase. It is still out of control and could cause a tremendous recession.

Europe has a serious energy supply problem because of bad policies. It decided to go crazy and on the energy roulette, it went “all in” on green. It made the wrong call however, and now the colour we get is red. Red for Putin, who invaded Ukraine. Red for Putin, who closed the second Nordstream 2 pipeline without opening it. Red for Putin, who is shutting down the rest of gas flows to Europe and leave Germany and the Germans wondering how it has come to this.

It came out red from Putin, who has only bought 30 billion in products from Europe , while we have paid him 120 billion, and now we are going to be cold, in particular the Germans, who are further east than the French, who also have a much less frigid climate and are much more “nuclearised”.

Now the social democratic Von der Leyen is getting nervous, because she is one of the big culprits for having bet everything on green.

Meanwhile, inflation is going up and up and up and up. Here, it is the French President of the European Central Bank (ECB), Christine Lagarde, who is on edge, doing nothing, except perhaps getting a tan.

A closer look at how Lagarde failed to do what’s needed

Eurostat published the following table, which lays bare the incompetence of the president of the European Central Bank. Lagarde should be fired without compensation.

By August 2021, the Eurozone had reached 3.0% inflation, but with 15 countries already above 2.0% inflation, with 11 countries of those 15 above 3% and 3 countries already above 4%. Underlying inflation had already reached 1.7% and was rising steadily.

ECB policy makers have two responsibilities, to prevent inflation from exceeding 2% and to prevent attacks on the Euro and its devaluation against other currencies.

In August 2021, Christine Lagarde should have started to take measures and prepare an emergency plan to stop inflation.

Months went by and in March 2022, when the war in Ukraine has just started, inflation in the Eurozone shot up to 7.4%, with core inflation up to 3.4%.

Meanwhile. Mrs Lagarde is still paralysed by análisis, does Little more tan talk and chat, while stating that this cannot go on. The ECB however continues to support deficit states.

Buying debt from deficit states with money from the European Central Bank means continuing to print money non-stop, which is exactly the opposite of what we need to do when we have inflation mainly caused by the millions of euros that the ECB has pumped into the economy by printing money, just like the American Federal Reserve.

There’s of course the small difference that the Fed already started to implement measures in March, when Lagarde was just chatting, while today, there is speculation that the United States may already end the interest rate hikes, as there are indicators that inflation may start to fal. This despite the fact that Fed chair Powell announced in Jackson Hole that he will not stop raising interest rates and that families and companies are going to suffer.

In June, Lagarde’s policy of doing nothing got Eurozone inflation up to 8.6%, with core inflation to 4.9%. In response, in July, Lagarde finally decided to come up with a “historic” hike of 0.5%, this while the American Federal Reserve was at 1.5%.

Conclusion

In sum, we now find us one year after the Eurozone’s Central Bank was supposed to to intervene and we have reached record high and continuously worsening inflation numbers of 9.1% inflation and 5.8% core inflation.

Mrs Lagarde has been too late all throughout. Inflation is now galloping freely in the Eurozone, with 3 countries above 20% inflation, with another 6 countries between 10% and 20% inflation and with France at the bottom of the Eurozone with 6.5%, when a year ago it had 2.4%.

Any skilled non-political profesional at the helm of the ECB would have addressed this problem fearlessly, helping to get inflation down, and therefore making energy bills cheaper.

Personally, I have always had a group of professional and highly skilled women by my side. Today, many young women are being promoted during their careers because of their value, but when I look at the Spanish  government and at the decision makers at the EU level Europe, I must conclude that politics, with its quotas for females and appointment of politicians to central Banks, has little to do with meritocracy or professionalism.

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