While the entire financial world is hanging on to every Mario Draghi word in hope Europe finally improves the market’s (if not the economy’s) “fundamentals” to new record highs, and joins the rest of the “developed” world’s central banks in injecting trillions of liquidity into the Div/0 P/E stocks “whatever it takes” (because in a world where only multiple expansion is left, the ECB is the last wildcard at least until the US is dragged right back into the global recession and the Fed admits any pipe dreams of a rate hike in 2015 were just that), something far more different may be taking place behind the scenes. According to at least one journalist, the Fiscal Times’ Patrick Smith, “Draghi appears set to leave Frankfurt and return to his native Italy the first chance he gets.”
Has the former Bank of Italy exec and Goldman employee had enough of fighting Germany tooth and nail over every proposal, if mostly for dramatic media consumption? “Impossible” most would say, and yet…
[Draghi’s departure] could be as soon as January, depending on a variety of circumstances in Frankfurt and Rome, according to well-placed sources who include a prominent private investor and a senior journalist in Rome. “Draghi wants out, fed up and stymied by Berlin,” one of these sources wrote in a note just before the weekend. In a subsequent message: “I am hearing from several [official] sources that he is entirely fed up with the monetary politics he confronts.”
Banish the idea: surely nobody in the statist establishment would permit their best-behaved (until now) Goldman alum to crush everyone’s hopes of kicking the can with merely verbal intervention: a stunning feat when markets demand trillions in actual monetization from both the Fed and the BOJ. Reality simply laughs in the face of such a preposterous notion. Still, Smith appears convinced: “Whether Draghi remains the European Union’s central banker now appears to depend on the political future of a man widely noted for his ambition. “The issue now is to engineer Draghi’s transition to the post of president in Italy,” as one of my sources tells me—and as all of them agree. “He would leave the ECB only if they [Draghi’s supporters] can get the transition from Frankfurt to Rome in place.”
As Smith helpfully points out, “questions arise instantly”:
Why would “Mr. Whatever It Takes,” who has proven a determined and effective builder of consensus in favor of a Keynesian recovery strategy, walk off the field before the game’s over?
Italian sources, moreover, dismiss the thought that Draghi is succumbing to the Bundesbank’s relentless resistance in what amounts to a war of attrition. “Fatigue doesn’t explain this,” the editor in Rome says. “There are a lot of people in Germany who’d be happy if Draghi were no longer in Frankfurt, but I don’t think it’s a question of being tired.”
Why would Draghi cash in a position of considerable international influence to take up the figurehead presidency of a mid-sized European power?
Again, no simple answers. Contrary to appearances, Draghi may have concluded recently that he won’t prevail against his austerian adversaries, some sources suggest. It is more likely that, as everyone has already concluded, he recognizes that there are no promising alternatives to succeed Giorgio Napolitano, who is expected to step down as president early next year. “Draghi’s a last resort for Italian politicians,” in the estimation of one informed source.
This alternate universe in which Draghi prepares to ascend the Italian throne even as he vacates the brand new on in Frankfurt is so detailed, it even has a proposed sequence of events:
Does, he, truly [want it]?
It appears he does, although nobody has a map of either Draghi’s heart or mind. In any case, we’ll know more soon. Presidents customarily deliver end-of-year speeches, and Napolitano is expected to say more as to when he’ll step down in the one due shortly.
“The probability now is he’ll leave in the second half of January, in which case the voting will start at the end of January,” the Roman editor says. Watch this space. Draghi’s hat will be in or out in little more than a month.
All that said, stranger things have happened: did anyone anticipate Barack Obama “firing” Bernanke when he did on June 18, 2013? Not a soul. Could Mario Draghi, for whatever reason, be next up in the “completely unexpected career change” category? We should know within months.
Full article: Mario Draghi: Goodbye ECB, Hello Italian Presidency? (Zero Hedge)