Super Mario to the Rescue @Medici_Manager

By  Published: September 10, 2012 http://www.nytimes.com/2012/09/11/opinion/super-mario-to-the-rescue.html

Germany’s Mannschaft has always been a formidable soccer team. Its chief quality has been a tenacity and tempo capable of overcoming all odds. This is not to say that Germany has failed to produce great footballers — Gerd Müller, Karl-Heinz Rummenigge and Franz Beckenbauer come to mind. It is merely to say collective power has trumped individual prowess.

David Smith

Mario Draghi, president of the European Central Bank.

Damon Winter/The New York Times Roger Cohen

But against one team Germany always breaks down as if caught in a web. It pushes, it presses, it pounds — and it flounders. That team is Italy, whose 2-1 victory over the favored German side in this year’s European Championship extended a long run of major-tournament domination over Germany. Italian malleability and artistry are too much for German diktat.

All of this comes to mind as I watch Super Mario undo Germany with a series of feints that have left hardline Bundesbank bruisers looking as nimble and effective as beached whales. (With a battle cry of “You will not short me!” Super Mario has also gone mano-a-mano with the hedgies betting against the euro, but that is another story.)

Little by little, Mario Draghi, the Italian president of the European Central Bank, has taken an institution whose overriding mission was to keep inflation in check — the obsession that built the Deutsche Mark — and turned it into a lender of last resort prepared to throw everything into buying the distressed euro-zone sovereign debt of countries like Spain and Italy and so preserve the euro. “Whatever it takes,” Draghi says. He means it.

Many Germans are not happy, convinced an inflationary southern rot is setting in, but Draghi is right. Europe is irreversible; for that, at this point, the euro must be, too. The preamble to the U.S. Constitution speaks of “a more perfect union.” The founding European treaties speak of “ever closer union.” For neither has the road to union been devoid of battles between north and south. But the cause has been worth the fight on both sides of the Atlantic: There simply is no greater one. For Europe the approaching centennial of the outbreak of World War I should be sufficient reminder of that.

But people have short memories. They think the euro is a dispensable experiment, a technical construct or a hedgie’s plaything, when it is the solemn gage of German commitment to a united Europe — a project that, like most great undertakings, comes at a price.

For both Germany and Italy, the European Union was a way out of post-war devastation and shame. For Italy, in addition, it was a way “to scale the Alps,” to tie itself to the more developed parts of Europe and resist the chaotic tug of its southern half. Now a united Germany views Europe more as actuary than supplicant. In Italy, by contrast, a certain European idealism endures. One way to view Draghi’s battle with Jens Weidmann and the Bundesbank is this: A big idea (Europe) versus a smaller one (price stability).

But what good is a Europe where the treaty-stipulated role of the central bank is being finessed by Super Mario, where Germany becomes the permanent subsidizer of debtor nations like Spain and Italy, and where depression and unemployment become the enduring lot of poorer countries unable to regain competitiveness through devaluation?

The answer is that this is not a good Europe. The immediate future will be very tough, but it is a lot better than the tumultuous alternative of Europe’s unraveling; and in this crisis the seeds of ever greater European integration are being sown. (If the E.C.B. is now the Fed, what must the European Union become?) The euro was a hasty marriage precipitated by the end of the Cold War, the quid pro quo of Germany’s anxious neighbors for its unification. This crisis is a belated post-bubble reckoning with the implications of that act.

And so the push is now on toward necessary conditions of a shared currency like fiscal union — Draghi’s unlimited purchase of bonds is conditioned on tough fiscal adjustment programs — and a banking union built around a new euro-zone supervisor. The path to both will be rough. Politicians’ interests are at stake. Economies are shrinking. But whatever the howls it is clear enough this far into the euro crisis that “ever closer union” is an obstinate idea that has entered the European consciousness, even if it goes unmentioned.

Certainly, it is present in Chancellor Angela Merkel’s mind. She lived under Communism in a Germany divided by the consequences of fascism and so knew the two great scourges of 20th-century Europe. Slowly, cautiously, falteringly she has moved in the right direction and deserves credit.

Draghi the Jesuit has helped her, with his elliptical phrases and very Italian capacity to zigzag to the objective. It is tempting to compare him to Alexander Hamilton at the time of the U.S. assumption crisis. But I prefer to see him as Andrea Pirlo, the Italian midfielder with 360-degree vision, never hurried, always assured, master of the short and the long pass, bane of Germany, a fantasist who hits the target with precision.

You can follow Roger Cohen on Twitter at twitter.com/nytimescohen , and on Facebook at facebook.com/RogerCohenReporter .

 

 

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