1 €1.1tn plan to save eurzone (Heather Stewart in The Guardian) The European Central Bank launched what City experts called a “shock and awe” plan to pump €1.1tn (£830bn) into the eurozone in a last-ditch attempt to prevent the single currency bloc sliding into an intractable slump.
In the teeth of fierce political resistance from Germany, ECB president Mario Draghi said he would inject €60bn of new money into financial markets every month until at least September 2016. The bank will use electronically created money to buy the bonds of eurozone governments – quantitative easing – to try to boost confidence, push up inflation and drive down the value of the single currency, helping to increase exports and kickstart growth.
The €60bn-a-month price tag for the QE programme, which will start in March, was larger than many in financial markets had expected, and underlined Draghi’s determination to hold the 19-member currency zone together. The banker, nicknamed “Super Mario” by traders, promised QE would continue “until we see a sustained adjustment in the path of inflation”.
The ECB is meant to keep inflation below, but close to, its target level of 2% – but prices have been rising at less than half that pace for the past year, against a background of plunging oil prices and anaemic growth. With average prices in the shops already falling across the single currency area, the ECB hopes to avoid the threat of a deflationary spiral, in which consumers and businesses slash spending while they wait for prices to fall further, dragging the economy into a recession.
The long-awaited launch of QE will infuriate Berlin, which views the policy as akin to a bailout for free-spending governments such as Greece, and fears that it could allow inflation to get out of control. A headline on the website of the newspaper Bild after the announcement read: “ECB takes billions of debt off ailing euro states: What happens to my money now?”
2 Generational change near for Saudi Arabia (San Francisco Chronicle) With the death of King Abdullah, the throne of Saudi Arabia passed to another son of the country’s founder as it has relatively smoothly for the past six decades. But it brings the oil-rich kingdom one step closer to a question that will test the unity of its royal family: Who in the next generation will reign?
Abdul-Aziz Al Saud, who united tribes and founded the kingdom that bears his name, had dozens of sons — possibly more than 50 — from multiple wives. Power has passed among them, from brother to brother, since his death in 1953. Crown Prince Salman, Abdullah’s half-brother, is now king.
But ranks of that generation, largely in their 70s and 80s, are thinning. Soon, the throne must go to the son of one those sons, potentially putting succession and power in the hands of one branch of the family at the expense of the others. The health of Salman, 79, is uncertain. He suffered at least one stroke that has left him with limited movement on his left arm.
Abdullah sought to ensure the transition goes without intra-family rivalries by formalizing the Allegiance Council, a body made up of the living sons of Abdul-Aziz and some of the prominent grandsons who vote to pick the king and crown prince. That legacy could be tested sooner than expected. In any case, the question of the generational shift in succession will jump to the fore.
3 South Africa’s political denialism (Johannesburg Times) Denialism is a terrible thing. Not only is it fundamentally dishonest, it obviates the need to find solutions to pressing problems and crises. Thus, during the presidency of Thabo Mbeki, the link between HIV and Aids was called into question and, as a result, critical and sensible interventions were not timeously taken.
Official denialism was back in evidence this week, when Gauteng’s MEC for community safety, Sizakele Nkosi-Malobane, insisted that the wholesale violence and looting being perpetrated by Soweto residents against foreign shopkeepers was not xenophobia.
Journalists covering the mayhem overheard the looters – men, women and children – screaming abusive epithets at their victims; there was talk of driving “the dogs” out. Some of the victims told of being branded makwerekwere (a derogatory term for foreigners) as they packed their belongings to leave Soweto, probably forever.
The Collins English dictionary defines xenophobia as “hatred or fear of foreigners or strangers, or of their politics or culture”. It is possible that thugs, even business rivals who can’t compete with foreign shopkeepers, are fuelling this outpouring of hate.
If so, their efforts have fallen on fertile ground in some poorer communities. The tragedy unfolding in Soweto shames us all and betrays the legacy of Nelson Mandela. Have we forgotten the terrible events of 2008?