On the eve of a very important European Council, Mario Draghi, whom some indicate as the possible new Prime Minister of a government of national unity blessed by the Quirinal, sends a loud and clear message in dramatic colors by speaking in the columns of the Financial Times.
The former ECB president speaks of the Coronavirus as "a human tragedy of potentially biblical proportions” which is not by chance compared to a war.
Faced with a reality unimaginable until a few weeks ago, Draghi issues a strong warning to governments and it is no coincidence that he does so on the eve of the European Council which today should decide on the use of the Mes and on Coronabonds, as eight European leaders are asking, arguing that to counter the recession that will follow the health emergency and to prevent it from turning into depression, as happened after the crisis of 29, a "rapid" and adequate intervention is needed.
In simple words, this means that governments must understand as soon as possible that the world has changed rapidly and that they must face the crisis situation by overcoming any hesitation with "a significant increase in public debt (…) which will be a permanent aspect of economies and can only be accompanied by cancellation of private debts".
Fundamental for Draghi is the “speed” of the intervention which, in this dramatic and convulsive phase, “will be essential for its effectiveness: the cost of a hesitation could be irreversible”. Europe, adds the former number of the ECB, has the possibility of facing the crisis and preventing the worst, but it must quickly "change the way you think, adjusting to this crisis as it would during a war".
In essence, for Draghi, exceptional tools are needed in exceptional times and, without going into the merits and without explicitly naming the State-saving Fund or Eurobonds, he invites governments to put in place also unprecedented tools for contrasting the recession and the risk of depression, because the shock we are facing "is not cyclical" and, never more than now, Europeans must "know how to support each other in pursuing what is clearly a common goal".
Draghi uses very strong and at the same time very clear words and recalls, in his speech on the British financial newspaper, that the role of the State is precisely that "of protect citizens and the economy from shocks for which the private sector is not to blame“, as happened in the face of wars, including “a significant increase in public debt, also to absorb the losses that will be generated in the private sector".
It is not just a question, underlines Draghi, of providing a subsidy to those who lose their jobs, but "above all" of safeguarding the jobs of companies, shops, commercial and industrial activities that have stopped. And it must be done with all the liquidity of the case, prompting the banks to flood the whole productive world with money: "They must give liquidity at no cost and not have limits that hinder them", as the ECB already began to do under his leadership. But that's not enough. Direct state aid is also needed, even at the cost of increasing public debt, which however "will not be burdened by interest increases", given the expansionary monetary policy.
Let us not forget - concludes Draghi addressing the heads of state and government of Europe, which in these hours is facing decisive choices for the whole of the Old Continent - of the "suffering of Europeans in the period" of the Great Depression of the XNUMXs and XNUMXs.
Thus speaks a statesman.
