DISSENSION IN THE RANKS Revolt in Frankfurt

Through an ironic twist of fate, just as the European Central Bank became the sole watchdog of the biggest banks in Europe, an important step towards achieving the Banking Union, discord has set in in Frankfurt.

In the beginning came the open opposition of Jens Weidmann, the president of the Bundesbank, compared to Mario Draghi's plan to "fix" the failure of the European project by printing money. Starting with "we will do everything" in the summer of 2012, the president of the ECB has also announced this year programs for the direct acquisition of bank assets, the goal being, of course, to fight deflation and to cause lending to resume.

By changing the voting system at the level of the executive management of the ECB, Draghi has succeeded in isolating and neutralizing Weidmann, but the joy for his "success" was short lived.

Reuters recently wrote that "Mario Draghi is being criticized for his authoritarian leadership style and the deficiencies in communicating with the other members of the management of the ECB". Moreover, "the important decisions are only made within a small cabinet", which includes Peter Praet, the chief-economist of the institution, and Benoit Coeure, whom the German press calls "Draghi's minister of foreign affairs".

The privilege of access to information seems to be denied even to some of the members of the executive management of the bank (ed. note: made up of six people), who were not informed prior to the making of two important decisions. The reason? Draghi has restricted access to information because, according to Reuters, he was worried that the "opposition", namely, the Bundesbank, would send it to the press "to block or discredit the decisions".

The announcement of the target for increasing the balance sheet of the ECB was "what upset the most" certain governors of the central banks in the Eurozone, according to Reuters, because "it created in the market precisely the expectations that the ECB wanted to avoid".

The news by Reuters further shows that "there are deep dissensions among the members of the Board of the Governors of the ECB concerning the policies that have to be passed in order to resolve the problem of too low inflation", and the estimates presented by the news agency show that seven to ten of the members of the Council are against a quantitative easing similar to the one in the United States (author's note: creating the money for acquiring the government bonds).

"We know now that the farther we go, Jens will not follow us", a banker from the ECB told Reuters, because "he won't be changing his position".

In yesterday's press conference, the president of the ECB tried to downplay the disagreements within the management of the BSE. "There is no coalition, no line of separation between the South and the North", said Draghi.

Unfortunately, his peremptory statement lacks credibility. The article by Reuters states that even Christian Noyer, the governor of the French Central Bank and one of those close to Draghi, has voted against the plan to buy ABS securities and secured bonds, because of the "insufficient training and mistaken technical aspects".

It would seem that Noyer's arguments were ignored, and in yesterday's press conference Mario Draghi announced the bond purchase program would last two years.

Anonymous sources from the ECB told Reuters that "the dissidents" are two members of the executive management, Yves Mersch and Sabine Lautenschlaeger, as well as the governors of the central banks of Germany, Holland, Luxemburg, Estonia and Latvia. Uncertain, but likely, is the opposition of the governors of Slovakia, Slovenia and Austria.

The revolt in Frankfurt has caused Ambrose Evans-Pritchard, of British daily The Telegraph, to write that "Mario Draghi's efforts to save the monetary union have run up against the Berlin Wall". In his opinion, if "the ECB goes through with quantitative easing, then the head of the central bank of Germany will resign, and if that doesn't happen, it will be Draghi that resigns".

According to the statements presented by Evans-Pritchard, "Bundesbank is trying to find every legal means to block the quantitative easing", and certain clauses from the bylaws of the ECB may transfer the decision making power to the 18 governors of the central banks in the Eurozone.

Given the weight of ECB shareholders, Germany would have 26% of the votes, which would allow removing Mario Draghi from the equation, according to the British journalist.

Perhaps this "mutiny" within the ECB has determined Draghi to keep the parameters of the monetary policy unchanged in yesterday's meeting. But what does it matter?

The autumn forecast published by the European Commission suggests a very gloomy outlook for the unity of opinion at the level of the fiscal and monetary authorities. For Ambrose Evans-Pritchard, "the conflict between the North and the South within the ECB reflects the political disagreements in the monetary union after six years of economic depression and mass unemployment" and it is hard to believe that "harmony" would once again be reached, especially amid the increasingly quicker appearance of nationalist political alternatives.

More or less jokingly, Evans-Pritchard writes that Draghi has the seat of Italy's presidency waiting for him, should he resign from the ECB, and that position could allow him to get vengeance, by leading Italy on the path to recovery, by bringing back the Lira.

But what if the "dissidents" become more agreeable? Does that mean that Draghi can save the Eurozone simply by printing money, in spite of the lack of cooperation from the other European authorities?

No, because all the measures to save the "European dream" of the last few years have involved the increasing erosion of the European treaties and the granting of discretionary powers to the monetary authorities, without any control from the citizens. Not even the judges dare defend the integrity of Europe's fundamental laws.

In "The decline and fall of the Roman Empire", historian Edward Gibbon extensively documented the collapse of the rule of law in those times. In his opinion, the appointment of judges dependent on the state was the main factor behind this collapse.

Starting off from the Gibbon's observations, American analyst Martin Armstrong considers that we have once again reached such an age. "Once the law only protects the government, the end is near, because not only do the civil rights disappear, but so do the means to protect your property", Armstrong writes on his website.

So then, what is Draghi fighting for? Only to start the printing presses, in order to extend the agony of a government system that has been condemned so many times over the course of history?