Last year I asked whether Turkey would be “City Zero in Global Contagion.” That question was based on the crisis unfolding in the Turkish lira which materially threatened a number of major European banks, especially those in Italy.
This week highlighted something really interesting for me that, I think, sets in motion a similar thesis about Turkey but for much different reasons. The sovereign debt crisis will come about purely because of a failure of confidence in institutions.
Competence is the key to staying at the top of human dominance hierarchies, not force. Those built on competence tend to last and those built on force are, at best, meta-stable for a specific period of time.
The difference between what’s happening in Turkey with President Erdogan taking control of the Turkish central bank and the end of Mario Draghi’s term heading the ECB cuts to the heart of this issue of competence versus force.
The Draghi Put-on
Draghi has projected this aura of the ever-in-control competent manager of Europe’s finances while steadfastly holding to policy ideas which have done nothing but destroy capital formation within the Eurozone.
His last statement and policy decision this week are emblematic of his inflexibility both intellectually and politically. And it’s clear that he’s trapped at whatever negative-bound he’s got in his head, handing off a Europe on the verge of collapse to his sister-in-tyranny, Christine Lagarde.
Draghi just fired his “Cheap Money Bazooka” on his way out the door to kick the can down the road another few months.
He’s setting the stage for the full-blown monetization and collapse of the European banking system under his successor, former IMF chief Christine Lagarde. What hasn’t worked for Europe for the past 11 years was just introduced again as the only way to save the situation.
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