Internal Discord Leaves ECB’s Threats Toothless

Commentary: Bundesbank’s Weidmann undercuts Draghi

by David Marsh
Market Watch

LONDON (MarketWatch) — A central bank’s ability to intimidate the financial markets through active, targeted intervention is directly proportional to its ability to deliver on promised action.

Exactly as in the Cold War.

Imagine if Harry S. Truman, Dwight D. Eisenhower or John F. Kennedy threatened the Soviet Union with nuclear retaliation in the event of intrusion on NATO territory. The next day, the president is called to order by his defense secretary who says deploying nuclear weapons is illegal. The deterrent would lose all credibility. Very likely, West Germany would have been overrun in the 1950s or 1960s by the Red Army.

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