A night at the opera: Mario Draghi, the European sovereign debt crisis and communications at the edge of the world

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A
NIGHT
AT
THE
OPERA:

MARIO
DRAGHI,
THE
EUROPEAN
SOVEREIGN
DEBT
CRISIS
AND

COMMUNICATIONS
AT
THE
EDGE
OF
THE
WORLD

Phillip
Yaw
Domfeh

Jour
594
B:
Master’s
Thesis

May
2013

i

Acknowledgements

First
and
foremost
I
would
like
to
thank
my
family
for
their
undying
belief
in

me.
Mother,
your
eternal
optimism
has
kept
me
going
through
the
most
difficult

moments.
You
taught
me
how
to
dream
and
more
importantly,
how
to
work

relentlessly
in
pursuit
of
such
goals.
You
are
my
inspiration.
Father,
your
support
is

never-‐ending
and
your
example
is
excellent.
You
are
a
self-‐made
man
and
I
respect

that
so
much.
I
am
the
proud
son
of
an
Ashanti.
Our
ancestors
were
kings,
and
our

golden
throne
never
touches
the
ground.
I
would
also
like
to
thank
my
committee

chair,
Burghart
Tenderich,
for
giving
me
the
guidance,
support
and
freedom
I

needed
to
complete
this
thesis.
To
my
committee
members,
Eric
Miller
and
Gabriel

Kahn,
your
insight
was
truly
invaluable.
I
have
learned
so
much
from
each
of
you.

Lastly,
I’d
like
to
thank
God
for
without
him
I
am
nothing
and
everything
is
vanity.

You
are
the
Father
of
kindness,
the
Son
of
forgiveness
and
the
Spirit
who
helps
me.

ii

Table
of
Contents

Acknowledgements

i

Abstract

iii

Act
1

1

The
Old
Opera
House:
An
Introduction

Act
2

10

The
European
Central
Bank

Act
3

13

In
the
Beginning:
Background
on
the
European
Sovereign
Debt
Crisis

Act
4

20

November
2011:
Baptism
by
Fire

Act
5

35

December
2011:
Other
Elements
Might
Follow…

Act
6

50

January
2012:
Silence

Act
7

55

February
2012:
Endgame

Act
8

59

Analysis:
The
Balancing
Act

Act
9

68

One
Man,
in
his
Time,
Plays
Many
Parts:
A
Conclusion

Appendix
A:
Gabriel
Kahn
Interview

71

Appendix
B:
Text
Analysis

75

Bibliography

88

iii

Abstract

This
paper
examines
the
complexities
of
technocratic
communications
in
the

modern
age
of
widespread
economic
crisis
and
globalization.
More
specifically,
it

provides
a
case
study
of
the
communications
made
by
the
European
Central
Bank

during
the
first
100
days
of
Mario
Draghi’s
leadership
of
the
institution.
It
chronicles

the
turbulent
political
and
economic
climate
of
the
Eurozone
during
the

aforementioned
period
while
also
attempting
to
illuminate
the
European
Central

Bank’s
complex
communication
strategy.
To
increase
the
palatability
of
such
trying

subject
matter,
the
events
of
Draghi’s
first
100
days
are
retold
in
the
light
of
an

opera-‐-‐
an
art
form
as
rich
and
complex
as
Europe’s
current
financial
predicament.

The
key
element
is
an
in
depth
critical
analysis
of
Draghi’s
actions
during
his
first

three
months
as
president.
It
is
properly
surmised
that
though
his
actions
appear
to

be
inscrutable
at
times,
his
tactics
consistently
supported
the
primary
functions
of

the
European
Central
Bank:
maintaining
price
stability
and
retaining
the
structural

solidity
of
the
Eurozone.

“All
the
world's
a
stage,

And
all
the
men
and
women
merely
players:

They
have
their
exits
and
their
entrances;

And
one
man
in
his
time
plays
many
parts.”

-‐
William
Shakespeare

1

Act
1

The
Old
Opera
House:
An
Introduction

Alte
Oper

European
political
elites
of
all
stripes
descended
upon
the
Old
Opera
House

of
Frankfurt,
October
19,
2011,
for
a
celebratory
evening
filled
with
classical
music,

fine
wine,
and
tactical
schmoozing.
Known
in
the
German
tongue
as
Die
Alte
Oper,

the
cause
of
the
fancy
raucous
hosted
at
the
historical
venue
was
the
retirement
of

Jean
Claude
Trichet,
the
former
President
of
the
European
Central
Bank.
1

Many
from

all
over
the
continent
came
to
recognize
the
leadership
that
he
exhibited
during
his

eight-‐year
term
as
the
head
of
the
world’s
second
largest
central
bank.

Despite
being
destroyed
during
World
War
II,
the
venue
had
been
home
to

many
events
since
its
creation
in
1880
and
following
its
reopening
after
the
war,
it

again
played
host
to
balls,
concerts
and
other
gatherings
of
the
wealthy
and

powerful.
Trichet’s
farewell
appeared
to
be
nothing
out
of
the
usual
sort.
However,

teaming
underneath
the
sounds
of
celebration
could
be
heard
the
rumblings
of
a

fiscal
catastrophe
that
could
not
only
level
the
Alte
Oper
once
more,
but
lay
bare
the

coffers
of
all
of
Europe
and
bring
the
continent
to
its
knees.

As
the
orchestra
played
the
soaring
notes
of
Mozart
in
the
grand
hall
–
the

sonic
representation
of
the
brilliance,
excellence
and
virtuosity
that
Europe
had

once
produced
–
a
far
more
accurate
display
of
the
region’s
immediate
and
dire
state

1

Jack
Ewing
et
al.,
“Europe’s
Leaders
Father
as
Pressure
Mounts
on
Debt,”
New
York

Times,
October
20,
2011,
B3.

2

could
be
found
whispering
quietly
in
the
back
room.

As
violins
rang
out
in

unbridled
glory,
the
European
Union’s
top
leaders
huddled
together,
feverishly

attempting
to
hatch
a
plan
adequate
enough
to
stem
their
sovereign
debt
debacle.

Among
those
present
was
Jean-‐Claude
Trichet
himself,
breaking
from
his
own

celebration
to
address
the
impending
doom
that
faced
the
financial
markets
of
the

Eurozone.
Also
present
were
Germany’s
Chancellor
Angela
Merkel,
French
President

Nicolas
Sarkozy
and
a
dark-‐haired
Italian
named
Mario
Draghi.
2

The
purpose
of
the
tiny
gathering
was
to
find
a
far-‐reaching
and
final
solution

to
the
debt
crisis
before
the
Euro
Summit
that
would
take
place
in
four
days.
Chief

amongst
leaders’
concern
was
addressing
what
many
considered
to
be
the
initial

sovereign
debt
contagion,
the
islands
of
Greece.

As
always,
the
European
Central
Bank’s
involvement
regarding
a
solution

was
at
the
forefront
of
the
discussion.
The
Eurozone
was
not
the
only
market
facing

economic
turmoil
-‐-‐
the
United
States,
England,
and
Japan
faced
similar
challenges.

The
solution
employed
by
many
of
these
countries
was
a
monetary
policy
known
as

“quantitative
easing.”

The
controversial
tactic
in
question,
usually
a
last
ditch
effort

to
stimulate
a
country’s
economy,
would
use
a
central
bank
would
to
buy
financial

assets
from
commercial
banks
and
private
institutions.
If
done
correctly,
the

injection
of
liquidity
could
bring
a
market
back
from
the
brink
and
stop
a
country

from
defaulting
on
its
bonds.
Though
other
nations
like
the
United
States
could

more
easily
enact
this
unconventional
plan,
the
matter
was
far
more
complicated
in

2

“The
Euro
Crisis;
A
Sense
of
Surrealism,”
The
Economist,
November
18
th
,
2011,

http://www.economist.com/blogs/freeexchange/2011/11/euro-‐crisis-‐
14?zid=295&ah=0bca374e65f2354d553956ea65f756e0.

3

the
Eurozone.
According
to
a
traditional
interpretation
of
Article
123
of
the
Lisbon

Treaty,
the
constitutional
basis
of
the
European
Union,
such
a
practice
was

unacceptable:

Overdraft
facilities
or
any
other
type
of
credit
facility
with
the
European

Central
Bank
or
with
the
central
banks
of
the
Member
States
(hereinafter

referred
to
as
‘national
central
banks’)
in
favor
of
Union
institutions,
bodies,

offices
or
agencies,
central
governments,
regional,
local
or
other
public

authorities,
other
bodies
governed
by
public
law,
or
public
undertakings
of

Member
States
shall
be
prohibited,
as
shall
the
purchase
directly
from
them

by
the
European
Central
Bank
or
national
central
banks
of
debt
instru
–

ments.
3

In
laymen’s
terms,
the
European
Central
Bank
was
prohibited
from
being
a

lender
of
last
resort.

Though
more
conservative
politicians
believed
the
issue
was
a
mute
matter,

none
such
a
politician
was
Nicolas
Sarkozy.
Reportedly
having
left
his
pregnant
and

notoriously
beautiful
wife,
Carla
Bruni,
to
venture
to
Frankfurt,
he
pleaded
for
the

ECB
to
step
up
their
purchasing
of
bonds
in
fiscally
unstable
and
weak
countries.
4

Trichet,
who
reportedly
switched
from
English
to
French
to
give
the
French

President
a
proper
rebuke,
swiftly
rejected
Sarkozy’s
suggestions.
5

Angela
Merkel

did
not
come
to
his
aid,
maintaining
her
position
as
the
harbinger
of
austerity.
6

The

3

“The
Treaty
of
Lisbon,”
accessed
December
20,
2012,
http://eur-‐
lex.europa.eu/JOHtml.do?uri=OJ:C:2007:306:SOM:EN:HTML.

4

“The
Euro’s
Frankfurt
Group:
A
Crisis?
Call
the
F-‐Team,”
The
Economist,
November

4
th
,
2011,http://www.economist.com/blogs/charlemagne/2011/11/euros-‐
frankfurt-‐group.

5

“The
Euro’s
Frankfurt
Group:
A
Crisis?
Call
the
F-‐Team,”
The
Economist,
November

4
th
,
2011,http://www.economist.com/blogs/charlemagne/2011/11/euros-‐
frankfurt-‐group.

6

Paul
Taylor,
“INSIGHT
–
Euro
Has
New
Politiburo
but
No
Solutions
Yet,”
Reuters,

November
7
th
,
2011,
http://www.reuters.com/article/2011/11/07/eurozone-‐
leadership-‐idUSL6E7M606T20111107.

4

tension
was
high
as
the
secret
meeting
concluded
and
a
solution
was
again
left

unfound.
It
was
a
classic
cliffhanger,
the
unsettling
ending
of
a
tumultuous
opening

Act.

Though
this
final
attempt
at
a
compromise
failed,
the
future
of
the
European

Central
Bank’s
involvement
in
the
sovereign
debt
crisis
was
no
longer
the

responsibility
of
Jean-‐Claude
Trichet.
It
was,
after
all,
his
farewell
party.
Despite
the

fact
that
the
event
was
in
his
honor,
he
truly
was
not
the
“belle
of
the
ball.”
The

central
role
in
the
opera
telling
the
story
of
the
Eurozone’s
economic
fate
had
been

recast
with
Mario
Draghi.

As
the
meeting
that
night
clearly
illustrated,
public
relations
would
play
a
key

roll
in
the
execution
of
the
European
Central
Bank’s
managing
of
the
Euro
crisis.

Given
that
the
European
Central
Bank’s
primary
objective
is
maintaining
price

stability
in
the
Eurozone,
the
reach
of
the
institution’s
power
and
authority
is

strictly
limited
to
the
setting
of
monetary
policy.
Monetary
policy
does
affect
the

financial
sector;
however,
such
decisions
alone
are
not
powerful
enough
to
bring

about
the
economic
and
political
landscape
desired
by
the
ECB.
As
a
result,
speaking

engagements,
press
conferences
and
interviews
would
be
key
tools
used
by
the

central
bank
to
advocate
for
the
changes
they
desired
in
the
Eurozone.

The
implementation
of
public
relations
practices
would
not
stop
at
speaking

engagements.
While
the
monetary
policy
stances
of
the
institution
needed
to
be

effectively
communicated
to
various
audiences,
additionally,
the
expectations
of
the

ECB’s
publics
(i.e.
European
leaders,
the
capital
market,
the
news
media,
etc.)

5

needed
proper
managing.
As
the
communications
department
falls
directly
under

the
jurisdiction
of
the
ECB’s
President,
Mario
Draghi
himself
would
be
squarely

responsible
for
these
operations.
7

For
the
purpose
of
this
thesis,
this
study
intends
to
examine
the
chief,
key

communication
tools
of
the
European
Central
Bank
during
the
first
100
days
of

Mario
Draghi’s
presidency.
The
author
intends
to
answer
the
question,
“Did
the

communications
of
the
European
Central
Bank
help
the
institution
accomplish
its

primary
objective
of
maintaining
price
stability
and
help
avoid
the
break
up
of
the

Eurozone?”
Additionally,
the
author
will
deconstruct
the
institution’s
behavior,

offering
a
satisfactory
analysis.

The
Importance
of
the
first
100
Days

Since
the
1930s,
the
first
100
days
of
a
new
president’s
time
in
office
have

been
seen
as
a
window
of
magnified
power
and
influence.
8

The
concept
originated

following
the
first
100
days
of
Franklin
D.
Roosevelt’s
presidency
when
he
used
his

newly
acquired
political
capital
to
push
through
the
New
Deal.
9

Since
then,
many

historians
and
members
of
the
press
have
found
the
time
period
an
appropriate

measure
by
which
to
infer
information
about
a
newly
elected
official.
Cambridge

Historian
Anthony
Badger
explains
the
use
of
“First
100
Days”
as
a
gauging
tool

7

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
December
8
th
,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111208.en.html.

8

Kenneth
T.
Walsh,
“The
First
100
Days:
Franklin
Roosevelt
Pioneered
the
100-‐Day

Concept,”
US
News,
February
12,
2009.

9

Kenneth
T.
Walsh,
“The
First
100
Days:
Franklin
Roosevelt
Pioneered
the
100-‐Day

Concept,”
US
News,
February
12,
2009.

6

exceptionally
well:
“It's
not
a
perfect
measure,
but
it's
a
useful
one—the
100-‐day

standard
for
gauging
presidential
effectiveness.
The
underlying
truth
is
that

presidents
tend
to
be
most
effective
when
they
first
take
office,
when
their

leadership
style
seems
fresh
and
new,
when
the
aura
of
victory
is
still
powerful,
and

when
their
impact
on
Congress
is
usually
at
its
height…”
10

Given
the
similarities
between
the
beginnings
of
both
leaders’
tenure,
one

facing
the
Great
Depression,
the
other
the
greatest
financial
crisis
to
hit
Europe
in

decades,
the
hundred-‐day
framework
seems
applicable.
While
Draghi
would
not

pass
any
legislative
body
of
work
like
the
New
Deal,
the
achievements
were
in
their

own
way
comparable.
During
the
first
four
months
of
his
presidency,
Draghi
was

instrumental
in
moving
the
Eurozone
towards
a
new
fiscal
compact.

He
helped

Greece
commit
to
a
strong
austerity
deal
and
allocated
nearly
€1
Trillion
into
the

Eurozone’s
“real
economy.”
11

The
Primacy
of
Draghi’s
Communication

Like
other
large
financial
institutions
of
the
ECB’s
size
and
magnitude,
the

most
senior
officer
is
the
first
and
foremost
a
public
representative
of
the
company.

The
European
Central
Bank’s
most
important
information
is
disseminated
through

10
Kenneth
T.
Walsh,
“The
First
100
Days:
Franklin
Roosevelt
Pioneered
the
100-‐Day

Concept,”
US
News,
February
12,
2009.

11

Angela
Monaghan,
“Eurozone
Bank
Lending
Slows
Despite
ECB’s
€1
Trillion

Cheap
Loans,”
The
Telegraph,
April
30
th
,
2012,

http://www.telegraph.co.uk/finance/financialcrisis/9236796/Eurozone-‐bank-‐
lending-‐slows-‐despite-‐ECBs-‐1-‐trillion-‐cheap-‐loans.html.

7

Mario
Draghi.
Similarly,
Ben
Bernanke
himself
makes
the
most
important

announcements
on
behalf
of
the
Federal
Reserve.

The
same
procedure
can
be
found
in
the
privatized
banking
world
as
well.

When
J.P.
Morgan
and
Chase
lost
over
$2
billion
dollars
in
portfolio

mismanagement,
none
other
than
CEO
Jamie
Diamond
himself
took
to
the
media,

explaining
the
situation
and
taking
responsibility
for
the
loss.
12

The
reputation
of

such
institutions
can
rise
and
fall
based
on
the
leadership
of
the
CEO
and
markets

generally
only
move
in
response
to
what
the
CEO
says
or
does.

Though
all
Executive
Board
members
of
the
ECB
give
speeches
regularly,

those
given
by
the
President
have
the
most
effect
in
both
the
financial
market
and
in

the
media
realm.
For
example,
during
the
month
of
November
fourteen
ECB

executive
board
members
gave
speeches.
Of
all
these
speeches,
the
popular
business

journal
The
Economist
only
reported
on
those
given
by
Mario
Draghi.
13

Even
larger

media
outlets
like
Reuters
focused
far
more
on
the
remarks
given
by
Draghi
than

that
of
any
other
board
member.

Similar
primacy
on
the
remarks
and
views
of
the
President
can
be
observed

during
their
press
conferences.

Though
each
ECB
press
conference
is
presided
over

by
both
the
President
and
the
Vice
President,
almost
all
questions
are
directed

towards
Draghi.
During
the
four
press
conferences
that
took
place
between

12

Nathan
Vardi,
“Jamie
Dimon:
We
Took
Far
Too
Much
Risk,”
Forbes,
May
13
th
,
2012,

http://www.forbes.com/sites/nathanvardi/2012/05/13/jamie-‐dimon-‐we-‐took-‐far-‐
too-‐much-‐risk/.

13
The
Economist.
“Topics:
European
Central
Bank,
November
2011.”
Last
accessed

December
10,
2012.
http://www.economist.com/topics/european-‐central-‐
bank?page=8.

8

November
2011
and
February
2012,
the
Vice
President
was
asked
only
two

questions.
14

Why
Interviews,
Speeches
&
Press
Conferences?

The
most
far-‐reaching
and
influential
communication
tactics
of
the
ECB
are

their
press
conferences,
speeches
and
interviews.
Press
conferences
are
given
once

a
month,
and
represent
the
only
time
the
press
can
ask
questions
outside
of

interviews,
which
are
extremely
rare.
Speeches
take
place
more
frequently,

however,
and
are
a
one-‐way
communication
tactic.

Even
though
the
institution
does
issue
press
releases
regularly,
such
releases

are
not
the
chief
function
by
which
the
ECB
communicates
with
Eurozone
leaders,

policy
makers
or
the
press.

Research
Methodology

For
primary
research
the
author
conducted
content
analysis
of
all
speeches,

interviews
and
press
conferences
given
by
Mario
Draghi
from
November
2011
to

February
2012.

The
author
also
conducted
an
interview
with
former
Wall
Street

Journal
Bureau
Chief
and
current
USC
Annenberg
Professor,
Gabriel
Kahn.

Regarding
secondary
research,
the
author
read
all
communications
made
by

the
European
Central
Bank
from
November
2011
to
February
2012.
This
included

all
press
releases,
governing
council
decisions,
press
conferences,
speeches
and

14

European
Central
Bank.
“Press
Conferences
in
2013.”
Last
accessed
January
5,

2013.
http://www.ecb.int/press/pressconf/2013/html/index.en.html.

9

interviews.
Also,
all
coverage
on
the
ECB
from
The
Economist
and
Reuters
during
the

allotted
time
period
was
also
read.

10

Act
2

The
European
Central
Bank

The
European
Central
Bank
is
one
of
the
seven
governing
institutions
of
the

European
Union.
15

The
Treaty
of
Amsterdam
formally
established
the
bank
on
June

1,
1998.
16

Since
its
creation,
it
has
been
headquartered
in
Frankfurt,
Germany,
the

largest
financial
capital
of
the
Eurozone.
17

It
is
the
second
largest
financial
capital
in

Europe,
however,
following
closely
behind
London.
18

The
European
Central
Bank
is
responsible
for
setting
and
enforcing
monetary

policy
in
the
Euro
area.
19

The
primary
objective
of
the
ECB
is
to
maintain
“price

stability.”
20

This
objective
is
executed
standardly
by
keeping
inflation
low
and

preventing
currency
deflation.

According
to
the
Governing
Council,
the
authoritative
body
of
the
bank,
the

ECB
defines
price
stability
as
roughly
.02%
inflation
over
the
medium
term
in

accordance
with
the
Harmonized
Index
of
Consumer
Prices.
21

15

Hanspeter
K.
Scheller,
The
European
Central
Bank:
History,
Role
and
Functions.

Frankfurt,
Germany:
European
Central
Bank,
2004.

16

Hanspeter
K.
Scheller,
The
European
Central
Bank:
History,
Role
and
Functions.

Frankfurt,
Germany:
European
Central
Bank,
2004.

17

Laura
Stevens,
“Frankfurt’s
Ambitions
Get
Cut
Back,”
The
Wall
Street
Journal,

December
3,
2012.

18

Mark
Scott,
“In
Euro
Zone,
Challenging
London
as
the
Continent’s
Financial

Capital,”
New
York
Times,
December
11,
2012.

19

Hanspeter
K.
Scheller,
The
European
Central
Bank:
History,
Role
and
Functions.

Frankfurt,
Germany:
European
Central
Bank,
2004.

20

Hanspeter
K.
Scheller,
The
European
Central
Bank:
History,
Role
and
Functions.

Frankfurt,
Germany:
European
Central
Bank,
2004.

21

European
Central
Bank.
“Measuring
Inflation
–
The
Harmonized
Index
of

Consumer
Prices
(HICP).”
Last
accessed
November
24,
2012.

http://www.ecb.int/stats/prices/hicp/html/index.en.html.

11

The
main
tasks
of
the
European
Central
Bank
are
defining
and
implementing

monetary
policy
in
the
Eurozone,
conducting
foreign
exchange
relations,
managing

the
official
foreign
reserves
in
Eurozone
countries,
and
promoting
the
smooth

operation
of
“payment
systems.”
22

They
are
also
responsible
for
fostering

international
and
European
fiscal
cooperation,
the
supervision
of
financial

institutions
and
the
printing
of
Euro
banknotes.
23

The
chief
shareholders
of
the
banking
institution
are
the
seventeen
national

banks
of
countries
that
have
adopted
the
Euro.
24

Included
are
countries
with
strong

economic
prowess
like
France
and
Germany
and
smaller
at-‐risk
regions
like
Spain,

Ireland,
Slovenia
and
Greece.

The
authoritative
body
of
the
European
Central
Bank
is
the
Governing

Council,
a
group
comprised
of
head
central
bankers
from
throughout
the

Eurozone.
25

The
head
of
the
council
is
the
ECB
President
who
works
closely
with
six

executive
board
members
appointed
by
the
European
Council.
26

Executive
board

members
are
more
influential
than
the
other
central
bankers
comprising
the

council,
speaking
regularly
on
the
behalf
of
the
bank
at
financial
conferences.

22

European
Central
Bank.
“Tasks.”
Last
accessed
January
5,
2013.

http://www.ecb.int/ecb/tasks/html/index.en.html

23

European
Central
Bank.
“Tasks.”
Last
accessed
January
5,
2013.

http://www.ecb.int/ecb/tasks/html/index.en.html

24

European
Central
Bank.
“Glossary.”
Last
accessed
January
5,
2013.

http://www.ecb.europa.eu/home/glossary/html/glosse.en.html

25

European
Central
Bank.
“The
Governing
Council.”
Last
accessed
January
5,
2013.

http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html.

26

European
Central
Bank.
“The
Governing
Council.”
Last
accessed
January
5,
2013.

http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html.

12

The
Governing
Council
of
the
ECB
meets
twice
every
month.
27

At
the
first

meeting,
the
group
assesses
all
recent
economic
and
monetary
developments
and

makes
appropriate
monetary
policy
decisions
in
light
of
their
evaluation.
At
their

second
meeting,
the
council
discusses
issues
related
to
the
responsibilities
of
the

bank
and
the
Euro
system.
Both
the
President
and
Vice
President
chair
each

meeting.
Though
the
decisions
are
always
made
public
at
the
following
press

conference,
the
discussions
are
held
in
private.

Although
guided
by
various
European
Union
treaties,
the
ECB
is
not
under

the
jurisdiction
of
any
specific
country
or
other
governing
entity.
28

As
a
result,
it

operates
independently.
Conversely,
there
are
limits
to
the
powers
of
the
bank,

many
of
which
were
made
evident
via
the
sovereign
debt
crisis.
Despite
the
fact
that

the
ECB
has
purchased
bonds,
lowered
interest
rates,
and
infused
liquidity
into
the

Eurozone
through
various
means,
it
has
no
authority
over
the
parliamentary
and

governing
parties
of
Eurozone
countries.
These
local
powers
have
sole
jurisdiction

over
their
individual
fiscal
policy.

27

European
Central
Bank.
“The
Governing
Council.”
Last
accessed
January
5,
2013.

http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html.

28

European
Central
Bank.
“The
Governing
Council.”
Last
accessed
January
5,
2013.

http://www.ecb.int/ecb/orga/decisions/govc/html/index.en.html.

13

Act
3

In
the
Beginning:
Background
on
the
European
Sovereign
Debt
Crisis

Since
2009,
European
countries
have
been
battling
a
sovereign
debt
crisis,

dramatically
affecting
the
future
of
their
union.
29

While
some
countries
began
facing

economic
trials
following
the
property
market
collapse
of
2008,
others,
like
Greece

and
Italy,
have
been
slowly
crippled
by
unsustainable
public
sector
wages
and

pension
commitments
as
well
as
irresponsible
banking
practices.
30

Unlike
the
United
States,
sharing
both
a
fiscal
union
and
monetary
policy,
the

Eurozone
shares
a
common
currency
without
a
fiscal
union.
As
a
result,
reactions
to

the
crisis
have
been
slow,
allowing
it
to
drastically
worsen.
31

The
continued
financial

tribulation
facing
the
Eurozone
has
shaken
the
faith
of
financial
investors,
markets,

and
Europe
itself.

On
May
9,
2010,
members
of
the
Eurozone
created
a
temporary
“special

purpose
vehicle”
called
the
European
Financial
Stability
Facility
to
help
preserve

financial
stability
in
Europe
and
provide
financial
assistance
to
Eurozone
countries

29

Encyclopedia
Britannica.
“Euro-‐zone
Debt
Crisis:
Timeline
of
Key
Events
in
the

European
Sovereign
Debt
Crisis.”
Last
Accessed
January
5,
2013.

http://www.britannica.com/EBchecked/topic/1795026/euro-‐zone-‐debt-‐
crisis/301861/Timeline-‐of-‐key-‐events-‐in-‐the-‐European-‐sovereign-‐debt-‐crisis

30

Encyclopedia
Britannica.
“Euro-‐zone
Debt
Crisis:
Timeline
of
Key
Events
in
the

European
Sovereign
Debt
Crisis.”
Last
Accessed
January
5,
2013.

http://www.britannica.com/EBchecked/topic/1795026/euro-‐zone-‐debt-‐
crisis/301861/Timeline-‐of-‐key-‐events-‐in-‐the-‐European-‐sovereign-‐debt-‐crisis

31

Wolfgang
Münchau,
“How
to
Build
a
Fiscal
Union
to
Save
the
Eurozone,”
Financial

Times,
May
27,
2012,
http://www.ft.com/intl/cms/s/0/24c71e96-‐a5bd-‐11e1-‐b77a-‐
00144feabdc0.html#axzz2Oy6yt95c.

14

in
economic
dire
straights.
32

However,
prior
to
November
2011
the
EFSF
had
not

been
fully
implemented
to
its
greatest
potential.
33

As
the
contagion
of
the
sovereign
debt
crisis
continued
to
spread
throughout

the
Eurozone,
the
main
solutions
offered
had
been
increased
fiscal
unity,
austerity

and
“quantitative
easing.”
As
with
most
budget
crises,
some
believe
that
severe

budget
cuts
are
necessary
to
move
forward.
34

Others
believe
that
the
ECB
should
be

used
as
a
lender
of
last
resort;
purchasing
as
many
government
bonds
as
necessary

to
make
ailing
countries
a
safer
bet
for
investors.
35

The
possibility
of
weaker

countries
leaving
the
Eurozone
had
been
actively
discussed
by
the
media,
despite

the
actuality
being
far
too
costly.
36

The
biggest
question
amongst
financial
investors,

markets
and
journalists
was
whether
or
not
the
ECB
would
engage
in
aggressive

bond
buying,
responding
to
the
crisis
in
a
fashion
similar
to
the
Federal
Reserve
and

the
Central
Bank
of
Japan.
37

32

European
Financial
Stability
Facility.
“About
EFSF.”
Last
Accessed
January
5,
2013.

http://www.efsf.europa.eu/about/index.htm.

33

Mario
Draghi,
“Continuity,
Consistency
and
Credibility.”
Lecture
at
Frankfurt

European
Banking
Congress
“The
Big
Shift,”
Frankfurt,
Germany,
November
18,

2011.

34

Gavin
Hewitt,
“Merkel
and
Sarkozy
Agree
to
Disagree,”
BBC
News
Europe,

November
24,
2011,
http://www.bbc.co.uk/news/world-‐europe-‐15875968.

35

Gavin
Hewitt,
“Merkel
and
Sarkozy
Agree
to
Disagree,”
BBC
News
Europe,

November
24,
2011,
http://www.bbc.co.uk/news/world-‐europe-‐15875968.

36

Annika
Breidthardt,
“Chances
of
Euro
Zone
Break
Up
Tumble
Since
Mid-‐2012
–
Survey
”
Reuters,
January
28,
2013,

http://www.reuters.com/article/2013/01/28/us-‐eurozone-‐breakup-‐survey-‐
idUSBRE90R0R820130128.

37
Shawn
Baldwin,
“Quantitative
Easing
in
the
Eurozone:
Enter
the
ECB,”
Forbes,
July

30,
2012,
http://www.forbes.com/sites/shawnbaldwin/2012/07/30/enter-‐the-‐
ecb-‐2/.

15

Regarding
the
crisis,
the
European
Central
Bank
has
often
stated
that
it
holds

to
a
traditional
interpretation
of
Article
123
of
the
Lisbon
Treaty,
classifying
all

crisis
related
tactics
as
“non
standard
measures.”
Despite
its
fidelity
being

constantly
referenced,
acts
like
the
purchasing
of
Greek
and
Italian
bonds
as
well
as

the
creation
of
Long
Term
Refinancing
Operations
under
Jean-‐Claude
Trichet’s

watch
have
been
exceptionally
controversial
and
the
source
of
much
criticism.
38

The
Greek
Problem

Four
days
after
Jean-‐Claude
Trichet’s
farewell
celebration,
leaders
from
all

over
the
world
met
at
the
Euro
Summit.
Though
there
was
hope
that
a

comprehensive
debt
deal
could
be
struck,
they
were
shattered
by
the
unforeseeable

decision
made
by
Greek
Prime
Minister
George
Papandreou.

Even
though
the
Greek

head
of
state
was
offered
€130
billion
dollar
in
bailout
funds
in
exchange
for
severe

budget
cuts,
Papandreou
instead
decided
to
put
the
decision
in
the
hands
of
the

Greek
people
in
the
form
of
a
referendum.
39

“We
trust
citizens,
we
believe
in
their

judgment,
we
believe
in
their
decision…"
stated
the
politician.
40

This
could
have

38

John
Hooper,
“Jean-‐Claude
Trichet
Defends
Buying
Bonds
to
Halt
European
Debt

Crisis,”
The
Guardian,
August
9,
2011,

http://www.guardian.co.uk/business/2011/aug/09/european-‐debt-‐crisis-‐trichet-‐
spain-‐italy-‐bonds.

39

“Greece’s
Prime
Minister
to
Quit
in
Deal
to
Salvage
Bailout
Package,”
CNN.COM,

November
8,
2011,
http://www.cnn.com/2011/11/06/world/europe/greece-‐main.

40

Dina
Kyriakidou
and
Harry
Papachritou,
“Greek
PM
Calls
Referendum
on
New
EU

Aid
Deal,”
Reuters,
October
31,
2011,

http://www.reuters.com/article/2011/10/31/us-‐greece-‐referendum-‐
idUSTRE79U5PQ20111031.

16

easily
resulted
in
the
ejection
of
Greece
from
the
Eurozone
and
the
severe
crippling

of
the
remaining
countries.

In
response,
financial
markets
went
into
an
upheaval.
Greek
bonds
were
sold

off
quickly
and
many
markets
around
the
world
slumped.
London's
FTSE
100
index

of
leading
shares
dropped
more
that
2pc,
with
markets
in
Germany,
France,
Spain

and
Italy
also
taking
a
hit.
41

The
actuality
of
Greece
rejecting
the
bailout
would
have

been
devastating.

According
to
Andrew
Lim,
a
banking
analyst
at
Espirito
Santo
in

London,
"If
Greek
voters
reject
the
unpopular
bailout
plan
it
could
result
in
a
“hard

default,”
which
could
force
banks
to
take
losses
of
about
75pc
on
their
Greek

sovereign
bonds,
trigger
payouts
on
credit
default
swap
insurance
contracts,
and

raise
the
threat
of
a
systemic
risk.

If
we
get
a
hard
default
in
Greece,
it
will

exacerbate
the
situation
with
Italy
and
Spain.
It
just
increases
the
problem
of
Italy

going
down
the
same
route,
and
that's
the
real
risk.
“
42

The
German
Dilemma

The
European
Central
Bank,
the
most
powerful
banking
institution
in
the

region,
was
modeled
after
the
Bundesbank,
the
central
bank
of
arguably
the
most

41

Nick
Fletcher,
“FTSE
Falls
2%
After
Greek
Referendum
News,
but
Reckitt
Rises
on

Bid
Talk,”
The
Guardian,
November
1,
2011,

http://www.guardian.co.uk/business/marketforceslive/2011/nov/01/ftse-‐greek-‐
referendum-‐reckitt-‐bid-‐talk.

42

Phillip
Aldrick
and
Richard
Blackden,
“Markets
fall
On
as
Greece
Announces

Referendum
on
Euro
Bail-‐Out,”
The
Telegraph,
November
1,
2011,

http://www.telegraph.co.uk/finance/financialcrisis/8861840/Markets-‐fall-‐on-‐as-‐
Greece-‐announces-‐referendum-‐on-‐euro-‐bail-‐out.html.

17

influential
country
in
the
Union.
With
the
largest
economy
in
the
Eurozone,

Germany’s
trade
and
commerce
supremacy
is
noticeably
greater
than
other

Eurozone
members
and
affords
that
country
more
dominance.
Established
in
1957,

the
Bundesbank’s
conservative
banking
style
was
influenced
greatly
by
the
failed

practices
of
the
Central
Bank
of
the
Weimar
Republic.
43

When
facing
difficult
economic
situations
in
the
1930s,
the
Weimar

Republic’s
central
bank
began
its
own
form
of
“quantitative
easing,”
resulting
is

hyperinflation.
The
situation
was
so
bad
that
barrels
of
money
were
used
to

purchase
a
slice
of
bread.
44

More
importantly,
the
weak
economic
state
of
the

Weimar
Republic
is
often
cited
as
one
of
the
factors
that
allowed
the
ascent
of
the

Nazi
Party.
45

The
German
fear
of
inflation
and
debt,
following
the
Weimar
Republic
and

World
War
II,
greatly
shaped
the
political
stances
of
the
country’s
leaders
and

further
complicated
the
crisis
recovery:

It's
that
financial
culture
—
a
deep-‐seated
aversion
to
debt
and
an
emphasis

on
responsibility
—
that
makes
Chancellor
Angela
Merkel's
hardline

approach
to
solving
the
European
financial
crisis
so
popular
in
Germany….

Around
the
world
Merkel
has
been
derided
as
intransigent
in
her
approach

43
David
Gordon
Smith,
“Fear
of
Inflation
in
Germany
After
Bundesbank
Comments,”

Spiegel
Online,
May
11,
2012,
http://www.spiegel.de/international/germany/fear-‐
of-‐inflation-‐in-‐germany-‐after-‐bundesbank-‐comments-‐a-‐832648.html.

44

Nicholas
Kulish,
“German
Fears
About
Inflation
Stall
Bold
Steps
in
Debt
Crisis,”

New
York
Times,
December
1,
2011,

http://www.nytimes.com/2011/12/02/world/europe/haunted-‐by-‐20s-‐
hyperinflation-‐germans-‐balk-‐at-‐euro-‐aid.html?pagewanted=all&_r=0.

45

Fabian
Lindner,
“In
Today’s
Debt
Crisis,
Germany
is
the
US
of
1931,”
The
Guardian,

November
24,
2011,
http://www.guardian.co.uk/global/2011/nov/24/debt-‐crisis-‐
germany-‐1931.

18

to
the
financial
crisis,
demanding
budget
cuts
and
fiscal
austerity
from

allegedly
profligate
EU
members.
46

Merkel’s
former
economic
advisor
Jens
Weidmann
had
a
similar
approach.
As

president
the
Bundesbank,
the
institution
had
remained
one
of
the
most
outspoken

critics
of
the
ECB’s
response
to
the
debt
crisis.
47

The
weight
of
its
influence
coupled

with
its
proximity
–
both
institutions
were
based
in
Frankfurt
–
made
the

Bundesbank
a
formidable
force.

The
Italian
Problem

Although
Draghi
was
an
accomplished
banker
in
the
public
and
private

sectors,
-‐-‐
most
notably
he
played
a
key
role
in
helping
Italy
during
their
‘90s

financial
crisis
48

-‐-‐
his
rise
to
the
office
of
ECB
President
was
initially
strongly

opposed.
49

Some
thought
that
his
tenure
in
Italy
would
make
him
soft
on
inflation

and
prone
to
dovish
banking
ideals.
The
greatest
opposition
initially
came
from

Germany.
However,
following
an
endorsement
from
Angela
Merkel
in
the
popular

German
paper
Die
Zeit
in
which
the
chancellor
stated
that
Draghi
“embodied
[the]

46

“Tough
EU
Stance?
It’s
Germanys
Culture!”
Associated
Press,
July
27,
2012.

47

Wolfgang
Münchau,
“Draghi
is
The
Devil
in
Weidmann’s
Euro
Drama,”
Financial

Times,
September
23,
2012.

48
Jack
Ewing
and
Landon
Thomas,
Jr.
“Mario
Draghi,
Into
the
Eye
of
Europe’s

Financial
Storm,”
New
York
Times,
October
30,
2011.

49
New
York
Times.
“Topics:
Mario
Draghi.”
Last
accessed
December
20,
2012,

http://topics.nytimes.com/top/reference/timestopics/people/d/mario_draghi/ind
ex.html.

19

German
ideals
about
economic
stability,”
his
path
to
office
was
cleared.
50

Regardless,
speculation
of
his
true
intentions
remained.

50

Rainer
Buergin,
“Draghi
Gains
Merkel’s
Backing
from
ECB
Post
as
Political

Opposition
Withers,”
Bloomberg
News,
May
11,
2011,

http://www.bloomberg.com/news/2011-‐05-‐11/merkel-‐says-‐germany-‐could-‐back-‐
draghi-‐for-‐ecb-‐president-‐die-‐ziet-‐reports.html.

20

Act
4

November
2011:
Baptism
by
Fire

Surprises

Prior
to
Mario
Draghi’s
first
press
conference
on
November
3
rd
,
the
Eurozone

received
troubling
economic
news.
On
November
1
st
,
unemployment
reached
its

highest
level
since
1998
at
10.2%,
while
youth
employment
reached
21.2%.
51

The

Euro
also
dropped
in
value
from
$1.42
to
$1.37.
52

The
environment
was
not

particularly
inviting.

While
giving
his
opening
remarks
during
his
first
press
conference,
Mario

Draghi
maintained
the
same
order
of
information
dissemination
practiced
by
his

predecessor
Trichet.
53

Firstly,
he
announced
the
Governing
Council’s
decision
to
cut

ECB
interest
rates
by
25%,
reducing
it
from
1.5%
to
1.25%.
54

He
then
followed
with

the
ECB’s
current
economic
analysis
view
on
fiscal
policies
in
the
Eurozone
and

ended
by
advocating
for
structural
reforms
before
opening
the
conference
up
to

press
questions.

During
his
remarks,
he
made
a
clear
distinction
between
the
interest
rate
cut

and
other
actions
being
taken
by
the
ECB
to
address
the
sovereign
debt
crisis.
The

51
Brian
Blackstone,
“Bloc’s
Economy
Edges
Nearer
to
Recession,”
Wall
Street
Journal,

November
1,
2011.

52
Brian
Blackstone,
“Bloc’s
Economy
Edges
Nearer
to
Recession,”
Wall
Street
Journal,

November
1,
2011.

53

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

54
European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

21

interest
rate
cut
was
framed
as
an
attempt
to
maintain
price
stability,
supporting
the

primary
mandate
of
the
institution.
55

It
was
an
indirect
response
to
the
crisis
while

“non-‐standard
measures”
were
specifically
crisis
related.

Draghi
stated
the
finality

of
such
measures
in
a
similar
fashion
to
his
predecessor:
“All
the
non-‐standard

monetary
policy
measures
taken
during
the
period
of
acute
financial
market

tensions
are,
by
construction,
temporary
in
nature.”
56

The
final
two
sections
of
his
opening
remarks
–fiscal
policies
and
structural

reforms
-‐-‐
were
used
to
call
Eurozone
political
leaders
to
take
the
actions
desired
by

the
ECB
and
comment
on
the
current
policy
environment.
In
the
fiscal
policies

section,
Draghi
acknowledged
the
events
of
the
Euro
Summit
and
asked
for
their

swift
ratification
of
reforms:

All
euro
area
governments
need
to
show
their
inflexible
determination
to

fully
honour
their
own
individual
sovereign
signature
as
a
key
element
in

ensuring
financial
stability
in
the
euro
area
as
a
whole.
The
Governing

Council
takes
note
of
the
fiscal
commitments
expressed
in
the
Euro
Summit

statement
of
26
October
2011
and
urges
all
governments
to
implement
fully

and
as
quickly
as
possible
the
measures
necessary
to
achieve
fiscal

consolidation.
57

Similar
language
was
used
regarding
structural
reforms.
Draghi
stated
that

such
changes
would
“strengthen
competitiveness,
increase
the
flexibility
of
their

55

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

56

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

57

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

22

economies
and
enhance
their
longer-‐term
growth
potential.”
58

The
aforementioned

advocacy
was
also
coupled
with
specific
desired
changes.
Among
them
were
the

moderation
of
public
wages
and
the
privatization
of
certain
public
sector
services.

Following
the
outline,
Draghi
concluded
his
remarks
by
again
urging
policy
makers

to
“rapidly
adopt
and
implement
the
measures
announced
and
recommended
in
the

Euro
Summit
statement
of
26
October
2011.”
59

As
the
new
leader
of
the
ECB,
Draghi
was
not
required
to
maintain
the
same

order
in
his
remarks
as
Trichet.

Similarly,
after
Bernanke’s
appointment
to
the

Federal
Reserve,
he
altered
the
press
conference
structure
established
by
his

predecessor,
Greenspan.
60

However,
the
stable
communication
platform
allowed
the

actual
communication
practice
to
not
distract
from
the
message
and
information

being
given.

The
opening
of
Draghi’s
first
remarks
testified
to
this
notion:
“I
am

delighted
to
proceed
now
with
our
well-‐established
practice
of
real-‐time

communication.”
61

Just
as
the
structural
consistency
of
his
remarks
showed
continuity,
the
order

of
topics
discussed
demonstrated
the
continued
stance
and
approach
of
the

institution.
Though
the
media
would
focus
mainly
on
aspects
of
the
press
conference

58

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

59

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

60

Gabriel
Kahn,
Interviewed
by
Phillip
Y.
Domfeh,
December
14,
2012,
Primary

Research
Interview,
transcript.

61

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

23

influenced
by
the
crisis
at
hand,
the
fact
that
the
crisis
was
addressed
last
framed
it

as
a
secondary
priority
to
the
bank’s
mandate.

Despite
the
stoicism
of
Draghi’s
remarks,
the
reaction
to
his
announcement

was
dramatic.
The
interest
rate
cut,
decided
upon
by
the
Governing
Council,
was
the

first
rate
cut
in
two
years.
Moreover,
Draghi
had
in
fact
broken
sharply
from
the

former
President’s
communication
style.
While
Trichet
would
usually
alert
the

financial
markets
with
hints
that
a
rate
cut
was
coming,
Draghi
took
the
market
by

surprise.

The
divergence
of
practice
was
noted
by
The
Economist,
“…already
he
is

doing
things
differently
from
his
French
predecessor.
Jean-‐Claude
Trichet
liked
to

prepare
the
ground
for
interest-‐rate
changes
by
signaling
them
before
they
were

actually
decided.”
62

The
surprise
of
the
interest
rate
cut
echoed
throughout
the
news
media
and

financial
markets
and
Mario
Draghi’s
boldness
colored
him
as
a
fresh,
new
leader.

Stocks
in
both
Paris
and
Frankfurt
shot
up
while
the
New
York
Stock
Exchange

opened
higher
then
previously
expected.
63

More
than
anything
else
discussed
in
the
press
conference,
the
surprise
cut

made
the
biggest
waves.

Of
the
eleven
articles
published
on
November
3
rd

by

Reuters
that
covered
the
press
conference,
five
referenced
the
rate
cut
in
their
title.

62

“Super
Mario
Takes
Change,”
The
Economist,
November
3,
2011,

http://www.economist.com/blogs/freeexchange/2011/11/european-‐monetary-‐
policy.

63

Chris
Isidore,
“European
Central
Bank
Cuts
Rates,”
CNN
MONEY,
November
3,

2011,
http://money.cnn.com/2011/11/03/news/international/ecb/index.htm.

24

Titles
included
ECB
Surprises
with
Rate
Cut,
Cautious
on
Bond
Buys
64

and
Instant

View:
ECB
Cuts
Interest
Rates
in
Surprise
Move.
65

Another
article
highlighted
the

President’s
demeanor
stating
Draghi
Keeps
Cool
in
Baptism
of
Fire.
66

Despite
the
focus
of
the
news
cycle,
press
questions
in
the
actual
conference

were
focused
elsewhere.
While
four
questions
were
asked
regarding
the
rate
cut,
six

were
focused
on
the
Island
of
Greece.
67

Following
Papandreou’s
announcement
of
a
referendum
on
Greece’s

involvement
in
the
Eurozone,
questions
on
the
fiscal
future
of
the
country
had
top

priority.
After
inquiries
regarding
Greece
and
the
interest
rate
cuts,
questions

regarding
the
Securities
Markets
Program
–
a
controversial
non-‐standard
measure,

and
quantitative
easing
were
the
next
most
frequently
asked
questions.
68

Draghi’s
answering
style
concerning
Greece
was
consistent.
He
would

generally
offer
minuscule
speculations,
quickly
pivoting
to
the
positive
actions
being

taken
by
the
ECB
and
other
governing
entities
of
the
EU
to
address
the
country’s

debt
problems.
He
would
then
conclude
with
a
call
to
action.
When
asked
if
he
was

64

Eva
Kuehnen,
ECB
Surprises
with
Rate
Cut,
Cautious
on
Bond
Buys,”
Reuters,

November
3,
2011,
http://www.reuters.com/article/2011/11/03/us-‐ecb-‐rates-‐
idUSTRE7A23LX20111103.

65

Eva
Kuehnen,
ECB
Surprises
with
Rate
Cut,
Cautious
on
Bond
Buys,”
Reuters,

November
3,
2011,
http://www.reuters.com/article/2011/11/03/us-‐ecb-‐rates-‐
idUSTRE7A23LX20111103.

66

Eva
Kuehnen,
ECB
Surprises
with
Rate
Cut,
Cautious
on
Bond
Buys,”
Reuters,

November
3,
2011,
http://www.reuters.com/article/2011/11/03/us-‐ecb-‐rates-‐
idUSTRE7A23LX20111103.

67

Phillip
Y.
Domfeh,
“Text
Analysis.”
(Master’s
thesis,
University
of
Southern

California,
2013).

68

Phillip
Y.
Domfeh,
“Text
Analysis.”
(Master’s
thesis,
University
of
Southern

California,
2013).

25

concerned
by
the
lack
of
a
concrete
solution
following
the
Euro
Summit,
Draghi

implemented
said
tactic:

It
is
very
hard
to
respond
on
a
situation
which
is
itself
evolving
swiftly.
We

are
monitoring
the
situation
closely
and
we
are
absolutely
confident
that
if

the
measures
that
have
been
set
out
in
the
programme
are
implemented,

together
with
the
deliberations
of
the
European
Council,
together
with
the

strengthening
of
the
banking
system,
together
with
the
decision
that
the

European
Council
has
taken
about
the
EFSF,
that
all
this
will
quiet
many

concerns.
But,
first,
we
should
go
back
to
the
first
point
I
made,
namely
the

implementation
of
the
right
economic
policies.
Other
than
that,
it
is
very
hard

to
comment
on
political
developments
in
Greece
now.
69

The
answer
was
comprehensive,
substantial
and
painted
both
Greece
and
the

ECB
in
a
positive
light
while
offering
little
speculation.

The
ECB
President
had
two
primary
defenses
during
his
first
press

conference:
the
ECB’s
mandate
of
price
stability
and
Article
123
of
the
Treaty
of

Lisbon.

To
contest
the
possibility
of
Greece
leaving
the
Eurozone,
Draghi
said,
“I

think
the
real
answer
is
that
it
is
not
in
the
Treaty
and
I
have
nothing
to
add
to
that:

it
is
not
in
the
Treaty.”
70

To
defend
the
ECB’s
position
as
being
against
quantitative

easing,
he
used
a
combination
of
the
two,
“With
regard
to
the
second
question,

actually
I
have
a
question
for
you:
what
makes
you
think
that
the
ECB
becoming
the

lender
of
last
resort
for
governments
is
what
is
needed
to
keep
the
euro
area

69

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

70

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

26

together?
No,
I
do
not
think
that
this
is
really
within
the
remit
of
the
ECB.
The
remit

of
the
ECB
is
maintaining
price
stability
over
the
medium
term.”
71

The
banking
institution’s
dedication
to
the
Treaty
was
repeatedly
used
to

deflect
speculation;
however
it
was
an
unsatisfactory
response
to
the
press.

Nevertheless,
when
asked
again
about
the
possibility
of
Greece
exiting
the

Eurozone,
he
would
implore
the
defense
despite
its
demonstrated
ineffectiveness:

“On
the
first
question,
I
have
answered
it
already:
it
is
not
in
the
Treaty.
We
are
all

bound
by
the
Treaty,
and
so
we
cannot
really
conceive
of
situations
which
are
not

envisaged
in
the
Treaty.”
72

The
second
to
last
question
Draghi
took
during
the
press
conference
was
in

regards
to
the
Bundesbank
and
was
the
second
question
during
the
press

conference
that
analyzed
the
relationship
between
the
new
ECB
leader
and
his

Germanic
constituents.
A
member
of
the
press
asked,
“Your
predecessor
Mr.
Trichet

was
criticized
by
many
Germans
for
throwing
the
Bundesbank
principle
overboard,

and
a
lot
of
Germans
are
fearfully
asking
themselves
if
you
stand
in
the
tradition
of

the
Bundesbank.
Perhaps
you
can
give
these
Germans
an
answer.”
73

The
German
public,
more
so
than
any
other
population
in
the
Eurozone
–

seconded
closely
by
those
of
Greece-‐
were
an
incredibly
important
audience
to
the

71

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

72

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

73

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

27

ECB
for
a
number
of
reasons.

Germany
was
the
solid
rock
of
the
Euro,
having
the

strongest
and
most
stable
economy
of
any
Eurozone
member.
74

One
of
the
major

keys
to
maintaining
Angela
Merkel’s
support
for
the
ECB
was
garnering
the
faith
of

her
constituents.

According
to
Gabriel
Kahn,
a
current
USC
professor
and
former

Wall
Street
Journal
Bureau
Chief,
the
matter
was
complicated:

…
Merkel’s
Germany
was
a
strong
force
against
the
bigger
and
bolder
actions

of
bond
buying
or
the
creation
of
a
common
Eurobond
–
an
act
that
would

illustrate
unity
[in
the
Eurozone]
and
potentially
have
positive
consequences

in
the
[financial]
market.

Her
stances
were
in
response
to
domestic

politics.
There
was
a
feeling
amongst
German
voters
that
they
are
paying
for

the
indiscretions
of
their
southern
neighbors.
75

While
the
ECB
operated
independently
from
any
government,
the
approval
and

opinion
of
this
group
still
mattered
and
obtaining
it
could
prove
difficult.

The
issue

was
further
complicated
by
the
constant
criticism
of
Weidmann.

Draghi’s
response
to
the
question
was
incredibly
important.
First,
the

President
started
by
extolling
the
German
Central
Bank:
“On
the
first
question,
I

have
great
admiration
for
the
tradition
of
the
Bundesbank…”
76

He
then
quickly

referenced
his
professional
experiences
with
two
top
German
economists:
“I
was
in

the
Treasury
in
Italy
in
the
1990s
and
we
had
many
opportunities
to
work
with

74

CNN
Money,
“World’s
Largest
Economies.”
Last
Accessed
February
12,
2013,

http://money.cnn.com/news/economy/world_economies_gdp/.

75

Gabriel
Kahn,
Interviewed
by
Phillip
Y.
Domfeh,
December
14,
2012,
Primary

Research
Interview,
transcript.

76

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

28

Hans
Tietmeyer
and
Helmut
Schlesinger,
so
I
developed
a
very
great
admiration
for

this
institution
throughout
these
years.”
77

Following
his
flattery,
he
aligned
himself
with
two
of
Germany’s
own
leading

economic
voices,
using
his
experiences
with
them
as
borrowed
credibility,
a

validation
of
his
own
conservative
credentials.
To
appease
the
journalist,
all
that

was
now
needed
was
a
clear
admission
that
his
term
would
follow
the
German

banking
tradition,
assuaging
any
fear.

This
did
not
happen.
Instead,
Draghi
spoke

coyly,
“As
for
the
future,
let
me
do
my
work
and
we
will
have
periodic
checks
as
to

whether
I
am
in
sync
with
this
tradition
or
deviating
from
it.”
78

The
response
was

neither
a
dedication
to
German
banking
principles
nor
a
flat
out
dismissal.
Instead,
it

attempted
to
validate
the
concerns
and
ideal
of
his
audience
while
simultaneously

shrouding
his
own
in
mystery.

Soon
after
his
clever
linguistic
maneuvering,
Draghi’s
first
ECB
press

conference
would
be
concluded.
Though
all
questions
were
answered
to

satisfaction,
the
matter
of
his
relationship
to
the
Bundesbank
was
not
an
open
and

shut
case.
It
wasn’t
anything
of
the
sort.
Rather,
the
inquiry
of
the
reporter

foreshadowed
an
engagement
soon
to
come.

Clash
of
the
Titans

Soon
after
the
press
conference,
the
situation
in
Greece
began
showing
signs

of
improvement.
The
proposed
referendum
was
reneged
upon
and
on
November
9
th

77

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

78

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
November
3,
2011,”
Accessed
October
15,
2012,

http://www.ecb.int/press/pressconf/2011/html/is111103.en.html.

29

Prime
Minister
Papandreou
resigned
from
his
post.

A
caretaker
government
was

created
the
following
day,
headed
by
former
ECB
Vice
President
Lucas
Papademos.

In
Italy,
the
news
was
not
as
positive.
Italian
bond
yields
had
risen

drastically,
with
10-‐year
bonds
reaching
a
yield
of
7.5
percent.
79

In
his
final
move
in

office,
Prime
Minister
Silvio
Berlusconi
passed
a
beleaguered
budget
plan
through

the
Italian
parliament.
80

Soon
after,
he
resigned
and
was
replaced
by
Mario
Monti
as

prime
minister.
Despite
his
experience
as
an
economist,
markets
reacted
negatively

to
the
regime
change.
81

Pressure
from
Eurozone
leaders
had
mounted
regarding
a

response
from
the
ECB.

On
November
18
th
,
Mario
Draghi
made
his
first
public
appearance,
speaking

at
the
Frankfurt
European
Banking
Congress
Conference
entitled
“The
Big
Shift.”
82

The
conference,
focused
on
emerging
economies
and
their
effect
on
the
global

market,
brought
together
leaders
in
European
banking
world
for
the
sharing
of

ideas,
thoughts
and
stances
on
the
current
economic
predicament
and
its

79

Paul
Dobson,
“Italian
Five-‐Year
Yield
Tops
7.5
Percent
on
LCH
Charge
as

Berlusconi
Quits,”
Bloomberg
News,
November
9,
2011,

http://www.bloomberg.com/news/2011-‐11-‐09/italian-‐government-‐bonds-‐open-‐
lower-‐five-‐year-‐yield-‐rises-‐to-‐6-‐92-‐percent.html/.

80

Lorenzo
Totaro
and
Chiara
Vasarri,
“Berlusconi
to
Resign
After
Austerity
Passes,”

Bloomberg
News,
November
8,
2011,
http://www.bloomberg.com/news/2011-‐11-‐
08/berlusconi-‐failure-‐to-‐win-‐majority-‐in-‐budget-‐vote-‐fuels-‐calls-‐to-‐step-‐
down.html.

81

Federico
Martire,
“Mario
Monti’s
New
Challenge,”
The
Beginner,
February
22,

2012,
http://www.thebeginner.eu/europe/all-‐in-‐employment-‐and-‐social/749-‐
mario-‐montis-‐new-‐challenge.

82

Mario
Draghi,
“Continuity,
Consistency
and
Credibility.”
Lecture
at
Frankfurt

European
Banking
Congress
“The
Big
Shift,”
Frankfurt,
Germany,
November
18,

2011.

30

implications
for
Europe.
Founded
in
1990,
November
2011’s
meeting
would
be
the

21
st

gathering
of
its
kind.
83

The
focus
on
pressing
world
economic
issues
made
the
conference
a
perfect

place
for
Draghi
to
make
his
first
public
speech
as
the
president
of
the
ECB.
Also,
the

conference,
located
in
Frankfurt,
allowed
him
to
not
only
address
financial
leaders

but
also
his
German
constituents.
More
interestingly,
Draghi
would
share
the
stage

with
the
Bundesbank’s
President,
Jens
Weidmann.

A
member
of
the
ECB’s
Governing
Council,
Weidmann
became
the
leader
of

the
German
Central
Bank
following
the
resignation
of
Axel
Weber,
who
had
grown

uncomfortable
with
the
ECB’s
involvement
in
the
sovereign
bond
market.
84

Weidmann
was
a
staunch
conservative
voice
on
the
ECB’s
Governing
Council,

actively
representing
German
interests.
85

Prior
to
the
conference
in
Frankfurt,
it
was
speculated
that
comments

Weidmann
made
during
an
interview
with
the
Financial
Times,
in
which
he
stated

that
support
for
the
Italian
bond
market
by
the
ECB
would
be
illegal,
were

subliminally
meant
for
Mario
Draghi.
86

Regardless
of
how
many
times
the
ECB

president
could
cite
the
Treaty
of
Lisbon
or
Article
123,
the
non-‐standard
measures

83

Maleki
Group.
“Frankfurt
European
Banking
Congress.”
Las
accessed
March
1,

2013,
http://www.malekigroup.com/ebc/.

84

Christian
Reiermann
and
Michael
Sauga,
“Enormous
Damage:
Weber’s
Exit

Highlights
Merkel’s
Euro
Problem,”
SPIEGEL
ONLINE,
February
14,
2011,

http://www.spiegel.de/international/germany/enormous-‐damage-‐weber-‐s-‐exit-‐
highlights-‐merkel-‐s-‐euro-‐problem-‐a-‐745377.html.

85

James
Shotter
“Profile,
Jens
Weidmann,”
Financial
Times,
February
17,
2011,

http://www.ft.com/intl/cms/s/0/28c6027c-‐3a03-‐11e0-‐a441-‐
00144feabdc0.html#axzz2Oy6yt95c.

86
“Brink
Think,”
The
Economist,
November
18,
2011.

31

that
were
in
place
prior
to
his
presidency,
namely
the
purchase
of
Italian
and
Greek

bonds,
the
SMP,
each
signified
a
break
from
the
ECB’s
conservative
tradition.
The

environment
in
which
Draghi
would
deliver
his
first
public
speech
was
not
without

some
hostility.

Originally,
Weidmann
was
scheduled
to
speak
at
the
conference
first.

However,
through
back
door
dealing
and
means
unknown
to
the
public,
Draghi
was

rescheduled
to
open
up
the
conference.
87

The
simple
reorganizing
of
the
speaking

schedule
gave
Draghi
the
opportunity
to
assert
himself
and
the
ECB
over
the

disapproval
of
the
German
economist.
In
an
article
entitled,
The
Euro
Crisis:
A
Sense

of
Surrealism,
The
Economist
noted
the
implications
of
the
altered
order
and
tension:

“Yet
even
more
than
the
speaking
order,
it
was
the
stridency
of
views
in
his
first

public
speech
outside
the
ECB,
which
drove
home
the
point
that
Mr.
Draghi
has
no

intention
of
playing
second
fiddle
to
Mr.
Wiedmann….
Mr.
Draghi
dwelled
on
the

need
for
discipline
and
reform
in
the
euro
zone's
periphery.”
88

As
recognized
by
The
Economist,
more
important
than
the
order
of
the
event

was
the
content
of
the
Mario’s
speech.
Entitled
Continuity,
Consistency
and

Credibility,
Draghi
took
the
opportunity
to
defend
the
recent
interest
rate
cut

decision
and
laid
out
the
monetary
policy
of
the
central
bank
by
way
of
three
simple

principles.
He
also
used
the
speech
to
continue
calling
Eurozone
leaders
to
action.

87

“The
Euro
Crisis;
A
Sense
of
Surrealism,”
The
Economist,
November
18
th
,
2011,

http://www.economist.com/blogs/freeexchange/2011/11/euro-‐crisis-‐
14?zid=295&ah=0bca374e65f2354d553956ea65f756e0.

88

“The
Euro
Crisis;
A
Sense
of
Surrealism,”
The
Economist,
November
18
th
,
2011,

http://www.economist.com/blogs/freeexchange/2011/11/euro-‐crisis-‐
14?zid=295&ah=0bca374e65f2354d553956ea65f756e0.

32

Similar
to
the
Three
R’s
of
Recycling
–a
mnemonic
devise
used
to
remember

recycling
principles,
the
Three
C’s
each
represented
a
different
aspect
and
function

of
the
ECB’s
monetary
policy:

Continuity
first
and
foremost
refers
to
our
primary
objective
of
maintaining

price
stability
over
the
medium
term.
Consistency
means
to
act
in
line
with

our
primary
objective
and
with
our
strategy
both
in
time
and
over
time.

Credibility
implies
that
our
monetary
policy
is
successful
in
anchoring

inflation
expectations
over
the
medium
and
longer
term.
This
is
the
major

contribution
we
can
make
in
support
of
sustainable
growth,
employment

creation
and
financial
stability.
And
we
are
making
this
contribution
in
full

independence.
89

The
simplification
of
the
policy
into
a
sound
bite
increased
the
likelihood
of

audience
and
media
retention.

Before
briefly
discussing
the
impact
of
emerging
economies
on
the
Eurozone,

Draghi
made
an
appeal
to
policy
makers.
Specifically,
he
chastised
Eurozone
leaders

for
not
successfully
implementing
the
EFSF,
a
financial
firewall
made
to
support

ailing
Eurozone
countries:

We
are
more
than
one
and
a
half
years
after
the
summit
that
launched
the

EFSF
as
part
of
a
financial
support
package
amounting
to
750
billion
euros
or

one
trillion
dollars;
we
are
four
months
after
the
summit
that
decided
to

make
the
full
EFSF
guarantee
volume
available;
and
we
are
four
weeks
after

the
summit
that
agreed
on
leveraging
of
the
resources
by
a
factor
of
up
to

four
or
five
and
that
declared
the
EFSF
would
be
fully
operational
and
that
all

its
tools
will
be
used
in
an
effective
way
to
ensure
financial
stability
in
the

euro
area.
Where
is
the
implementation
of
these
long-‐standing
decisions?
90

89

Mario
Draghi,
“Continuity,
Consistency
and
Credibility.”
Lecture
at
Frankfurt

European
Banking
Congress
“The
Big
Shift,”
Frankfurt,
Germany,
November
18,

2011.

90

Mario
Draghi,
“Continuity,
Consistency
and
Credibility.”
Lecture
at
Frankfurt

European
Banking
Congress
“The
Big
Shift,”
Frankfurt,
Germany,
November
18,

2011.

33

Following
the
defense
of
the
interest
rate
cut,
non-‐standard
measures
and

the
call
to
action,
the
ECB
president
did
not
directly
respond
to
the
supposed

criticisms
of
Weidmann
or
address
German
concerns.
He
did,
however,
conclude
by

saying,
“In
spite
of
the
current
challenges
faced
by
the
global
economy,
we
must

resist
the
temptation
to
resort
to
unilateral
policies,
and
we
must
work
together
to

ensure
that
the
gains
achieved
are
firmly
secured
for
future
generations.
“
91

This

could
be
construed
as
a
reference
to
the
more
dogmatic
ideology
of
Weidmann
and
a

call
to
an
“all
options
on
the
table”
approach
to
solving
the
debt
crisis.
Nevertheless,

the
intentions
of
these
comments
were
indecipherable.

The
news
coverage
that
followed
the
speech
focused
heavily
on
Draghi’s
call

to
action.
In
a
Reuters
article
entitled
Brussels
Seeks
Tighter
Budget
Control,
ECB

Impatient,
it
was
written,
“ECB
President
Mario
Draghi
told
euro
zone
governments

to
get
their
new
rescue
fund
up
and
running,
expressing
exasperation
at
their
lack
of

progress
in
responding
to
the
escalating
debt
crisis.”
92

Similarly,
in
the
article
ECB’s

Draghi
Pressures
Governments
to
Start
Bailout
Fund,
the
same
perspective
was
taken,

“Draghi
pressed
euro
zone
governments
on
Friday
to
kick-‐start
their
EFSF
rescue

91

Mario
Draghi,
“Continuity,
Consistency
and
Credibility.”
Lecture
at
Frankfurt

European
Banking
Congress
“The
Big
Shift,”
Frankfurt,
Germany,
November
18,

2011.

92

Jan
Strupczewski
and
Sakari
Suoninen,
“Brussels
Seeks
Tight
Budget
Control,
ECB

Impatient,”
Reuters,
November
18,
2011,

http://www.reuters.com/article/2011/11/18/us-‐eurozone-‐
idUSTRE7AC15K20111118.

34

fund,
resisting
pressure
from
some
capitals
for
the
ECB
to
do
more
to
tackle
the

bloc's
debt
crisis.”
93

The
message
was
decisive.
The
aggressive
language
used
by
Draghi
made
it

clear
that
the
ECB
would
not
be
pressured
into
action.
It
also
clarified
that
the

responsibility
for
addressing
the
threat
caused
by
Italy
laid
squarely
on
the

shoulders
of
Eurozone
policy
makers.
Though
German
constituents
were
not

formally
addressed,
the
prescription
of
action
instead
of
liquidity
lined
up
with
their

stance.

Draghi’s
next
speaking
engagement
would
take
him
to
before
the
European

Parliament
in
Brussels
and
it
could
be
expected
that
the
story
following
the
soon-‐
coming
engagement
would
be
the
same.
As
it
would
turn
out,
four
little
words
would

upset
that
prospect.

93

Paul
Carrel
and
Sakari
Suoninen,
“ECB’s
Draghi
Presses
Governments
to
Start

Bailout
Fund,”
Reuters,
November
18,
2011,

http://www.reuters.com/article/2011/11/18/us-‐ecb-‐draghi-‐
idUSTRE7AH0RR20111118.

35

Act
5

December
2011:
Other
Elements
Might
Follow…

Before
Draghi’s
scheduled
visit
to
Brussels,
Standard
&
Poors
downgraded

Belgium’s
credit
rating.
The
decision
was
in
light
of
the
fact
that
the
country
went

530
days
without
a
formal
government.
94

After
the
rating
drop,
the
yields
on
5-‐year

bonds
jumped
to
the
record
high
of
5.68%.
95

On
November
29th,
a
coalition
of
Eurozone
finance
ministers
announced

that
the
financial
block’s
bailout
fund
would
have
less
capacity
to
offer
liquidity
than

previously
expected,
calling
on
both
the
ECB
and
the
IMF
for
increased
financial

support.
96

During
the
same
day,
Italian
bond
auctions
went
poorly
as
10-‐year
bonds

were
sold
with
yields
of
7.5%
and
3-‐year
bonds
had
yields
close
to
8%.

The
economic
outlook
was
bleak.
97

Mario
Draghi
appeared
before
the
European
Parliament
on
December
1
st

for

a
hearing
on
the
ECB’s
actions
over
the
last
year.
While
giving
his
remarks,
Draghi

again
addressed
the
most
recent
ECB
decision
to
cut
interest
rates,
explained
the

94

David
Gaffen,
“S&P
Downgrades
Belgium
to
AA
on
Funding
Pressure,”
Reuters,

November
25,
2011,
http://www.reuters.com/article/2011/11/25/us-‐belgium-‐sp-‐
idUSTRE7AO1F220111125.

95

David
Gaffen,
“S&P
Downgrades
Belgium
to
AA
on
Funding
Pressure,”
Reuters,

November
25,
2011,
http://www.reuters.com/article/2011/11/25/us-‐belgium-‐sp-‐
idUSTRE7AO1F220111125.

96

Jan
Strupczewski
and
Valentina
Za,
“Europe
Ramps
Up
Rescue
Fund,
May
Turn
to

IMF,”
Reuters,
November
29,
2011,

http://www.reuters.com/article/2011/11/29/us-‐eurozone-‐
idUSTRE7AR0P320111129.

97

Jan
Strupczewski
and
Valentina
Za,
“Europe
Ramps
Up
Rescue
Fund,
May
Turn
to

IMF,”
Reuters,
November
29,
2011,

http://www.reuters.com/article/2011/11/29/us-‐eurozone-‐
idUSTRE7AR0P320111129.

36

necessity
for
non-‐standard
crisis
measures
and
continued
his
advocacy
for
unified

banking
regulations
in
the
Eurozone.

For
the
third
time
since
the
actual
interest
rate
cut
he
gave
further

explanation
as
to
why
the
decision
was
made,
“Downside
risks
to
the
economic

outlook
have
increased.
The
weaker
degree
of
activity
is
moderating
price,
cost
and

wage
pressures.
It
is
in
this
context
that
the
ECB
decided
to
reduce
its
key
interest

rates
by
25
basis
points
in
early
November
2011.”
98

Though
defense
of
the
interest

rate
cut
was
sound,
it
was
unnecessary
considering
that
it
was
a
non-‐controversial

measure.
More
importantly,
markets
had
responded
positively
to
the
decision

nearly
a
month
before
and
the
press
had
not
continued
to
focus
on
it.
99

In
contrast,

the
continuation
of
the
Securities
Markets
Program
was
far
more
controversial.

The
SMP
would
not
be
directly
discussed
in
the
speech;
however,
Draghi
did

explain
the
reasoning
behind
all
the
non-‐standard
measures
that
were
currently
in

use.
Where
as
before
they
had
been
held
at
distance
from
maintenance
of
price

stability
in
the
Eurozone,
they
were
this
time
discussed
as
a
means
to
accomplishing

that
goal:

As
you
know,
the
ECB’s
monetary
policy
is
constantly
guided
by
the
goal
of

maintaining
price
stability
in
the
euro
area
over
the
medium
term.
And
when

I
say
this,
I
mean
price
stability
in
either
direction.
This
applies
to
both
the

98

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the
Occasion

of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”
Presentation
at

European
Parliament,
Brussels,
Belgium,
December
1,
2011.

99

Aaron
Smith,
“European
Markets
End
Higher
on
ECB
Rate
Cut,”
CNN
Money,

November
3
2011,

http://money.cnn.com/2011/11/03/markets/world_markets/index.htm.

37

setting
of
official
interest
rates
and
the
implementation
of
non-‐standard

measures.
100

He
further
went
on
to
explain
how
despite
the
attempt
to
create
more

liquidity
in
the
financial
market
via
the
rate
cut,
the
diversity
amongst
economic

policies
throughout
the
Eurozone
was
obstructing
the
monetary
policy
decision,

thus
making
it
necessary
to
implore
nonstandard
measures
to
increase
liquidity:

Dysfunctional
government
bond
markets
in
several
euro
area
countries

hamper
the
single
monetary
policy
because
the
way
this
policy
is
transmitted

to
the
real
economy
depends
also
on
the
conditions
of
the
bond
markets
in

the
various
countries….This
is
the
very
important
monetary
policy
reason
for

the
ECB’s
non-‐standard
measures.
101

The
argument
excellently
framed
the
operational
crisis
response
of
the
ECB

supporting
of
price
stability
instead
of
a
handout
to
weak
Eurozone
countries.

Following
the
justification
of
their
behavior,
Draghi
took
a
far
softer
tone

regarding
the
decision
making
of
the
EU
leaders
than
he
had
in
late
November.
The

impatience
noted
at
the
Frankfurt
Congress
was
replaced
with
sympathy:

We
are
aware
of
the
continuing
difficulties
for
banks
due
to
the
stress
on

sovereign
bonds,
the
tightness
of
funding
markets
and
scarcity
of
eligible

collateral
in
some
financial
segments.
We
are
also
aware
of
the
problems
of

maturity
mismatches
on
balance
sheets,
the
challenges
of
raising
levels
of

capital
and
the
cyclical
risks
related
to
the
downturn.
102

100

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the

Occasion
of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”

Presentation
at
European
Parliament,
Brussels,
Belgium,
December
1,
2011.

101

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the

Occasion
of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”

Presentation
at
European
Parliament,
Brussels,
Belgium,
December
1,
2011.

102

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the

Occasion
of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”

Presentation
at
European
Parliament,
Brussels,
Belgium,
December
1,
2011.

38

Whereas
last
time
he
chastised
them
for
not
acting
to
address
the
crisis,
he

ironically
commended
them
for
their
actions
during
review
of
the
actions
of
his
own

institution:

The
European
Parliament
has
contributed
decisively
to
that
progress,
and

the
ECB
commends
that
work.
The
“six
pack”,
the
European
Semester,
the

Euro
Plus
Pact:
all
these
initiatives
have
set
the
stage
for
closer
coordination

and
more
intensive
scrutiny
of
economic
policies
in
the
EU,
particularly
in

the
euro
area.
103

Draghi
concluded
his
pandering
with
the
request
of
a
“new
fiscal
compact.”

He
believed
that
the
Eurozone
needed
a
“fundamental
restatement
of
the
fiscal
rules

together
with
the
mutual
fiscal
commitments
that
euro
area
governments
have

made.”
104

The
concept
was
new,
however,
not
revolutionary;
it
followed
logically
with

the
arguments
made
before.
A
fiscal
compact
would
allow
the
actualization
of
the

ECB’s
monetary
policy
and
restore
“credibility”
to
the
economic
area.
It
was
the

statement
that
followed
his
request
that
turned
the
media
upside
down.
While

landing
his
conclusion
Draghi
stated,
“Other
elements
might
follow,
but
the

sequencing
matters.
And
it
is
first
and
foremost
important
to
get
a
commonly
shared

fiscal
compact
right.”
105

103

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the

Occasion
of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”

Presentation
at
European
Parliament,
Brussels,
Belgium,
December
1,
2011.

104

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the

Occasion
of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”

Presentation
at
European
Parliament,
Brussels,
Belgium,
December
1,
2011.

105

Mario
Draghi.
“Hearing
Before
the
Plenary
of
European
Parliament
on
the

Occasion
of
the
Adoption
of
the
Resolution
on
the
ECB’s
2010
Annual
Report.”

Presentation
at
European
Parliament,
Brussels,
Belgium,
December
1,
2011.

39

Many
believed
that
the
aforesaid
statement
was
a
hint
that
the
ECB
was

considering
engaging
in
the
act
of
quantitative
easing
and
being
a
lender
of
last

resort
to
the
embattled
Eurozone.
According
to
a
then
recently
published
Reuters

poll,
despite
the
avid
dismissal
of
the
practice
by
Draghi,
readers
overwhelmingly

considered
it
a
50/50
chance
that
the
bank
might
engage
in
the
practice.
106

It
appeared
that
Draghi
had
laid
out
a
grand
bargain
to
the
European

Parliament
and
was
using
the
power
that
came
with
his
newly
appointed
office
to

embark
on
brassy
and
drastic
changes.
If
European
leaders
gave
him
a
far-‐reaching

and
substantial
fiscal
compact,
Draghi
would
be
willing
to
step-‐up
the
actions
of
the

ECB.

In
the
article,
ECB
Opens
Door
to
Action,
Sarkozy
Seeks
New
Treaty
the
very

first
sentence
read
“The
new
head
of
the
European
Central
Bank
signaled
on

Thursday
it
stood
ready
to
act
more
aggressively
to
fight
Europe's
debt
crisis
if

political
leaders
agree
next
week
on
much
tighter
budget
controls.”
107

In
another

article
entitled,
ECB’s
Draghi
Says
Risk
Has
Worsen
Again,
a
similar
narrative
was

continued,
“European
Central
Bank
President
Mario
Draghi
signaled
it
was
willing
to

take
further
action
to
prop
up
the
euro
zone
economy
in
a
speech
to
the
EU

parliament
on
Thursday….”
108

Both
articles
went
on
to
further
speculate
that

106

“Factbox:
Economists
evenly
split
on
ECB
QE,”
Reuters,
November
18,
2011,

http://www.reuters.com/article/2011/11/18/us-‐ecb-‐poll-‐factbox-‐
idUSTRE7AH0PH20111118.

107

John
O’Donnell
and
Emmanuel
Jarry,
“ECB
Opens
Door
to
Action,
Sarkozy
Seeks

New
Treaty,”
Reuters,
December
1,
2011,

http://www.reuters.com/article/2011/12/01/us-‐eurozone-‐
idUSTRE7AR0P320111201.

108

John
O’Donnell
and
Emmanuel
Jarry,
“ECB
Opens
Door
to
Action,
Sarkozy
Seeks

New
Treaty,”
Reuters,
December
1,
2011,

40

potentially,
Draghi
had
hinted
at
another
interest
rate
cut.
Reuters
also
posted
a

video
entitled,
ECB
Hints
at
Further
Eurozone
Action,
speculating
on
what
the
four

words
meant.
109

Though
he
said
in
his
speech
that
the
remarks
given
that
day
should
not
be

interpreted
as
a
window
into
soon
coming
policy
decisions
by
the
ECB,
his
four

words
had
put
the
continent
into
motion.
French
President
Sarkozy,
invigorated
by

the
potential
promise
of
his
desired
lifeline,
went
on
a
mad
dash
trying
to
get
tighter

regulations.
Immediately,
Sarkozy
was
in
France
asking
for
a
new
fiscal
pact.

He

said
dramatically,
"Let
us
not
hide
it,
Europe
may
be
swept
away
by
the
crisis
if
it

doesn't
get
a
grip,
if
it
doesn't
change."
110

When
asked
what
he
believes
would
be
the
ECB’s
roll
regarding
the
crisis

Sarkozy
said,
"Naturally
the
European
Central
Bank
has
a
decisive
role
to
play
...
I
am

convinced
that
faced
with
the
risk
of
deflation
in
Europe
the
central
bank
will

act.”
111

His
conviction
that
the
ECB
would
act
was
fierce.
On
December
5
th

Sarkozy,

joined
now
by
Angela
Merkel,
gave
European
Union
governments
an
ultimatum
by

http://www.reuters.com/article/2011/12/01/us-‐eurozone-‐
idUSTRE7AR0P320111201.

109

“Frosty
Euro
Zone
Outlook
from
the
Bundesbank,”
Reuters,
December
1,
2011.

110

John
O’Donnell
and
Emmanuel
Jarry,
“ECB
Opens
Door
to
Action,
Sarkozy
Seeks

New
Treaty,”
Reuters,
December
1,
2011,

http://www.reuters.com/article/2011/12/01/us-‐eurozone-‐
idUSTRE7AR0P320111201.

111

John
O’Donnell
and
Emmanuel
Jarry,
“ECB
Opens
Door
to
Action,
Sarkozy
Seeks

New
Treaty,”
Reuters,
December
1,
2011,

http://www.reuters.com/article/2011/12/01/us-‐eurozone-‐
idUSTRE7AR0P320111201.

41

which
they
had
one
week
to
“accept
greater
central
control
over
their
national

budgets.”
112

Don’t
Get
Your
Hopes
Up

Preceding
the
December
8
th

press
conference,
there
was
much
speculation
in

the
media
regarding
what
would
be
announced.
In
an
article
titled,
Time
of

Reckoning
for
the
Euro
Zone,
The
Economist
offered
their
best
conjecture,
“More

focus
will
be
on
ECB
President
Mario
Draghi's
news
conference,
where
he
could

expand
on
the
ECB's
readiness
to
act
as
lender
of
last
resort….”
113

Like
many
others,

the
publication
had
speculated
since
the
first
of
the
month
that
Draghi
would
unveil

a
“more
aggressive
action”
to
fight
the
sovereign
debt
crisis.
114

Prior
to
the
press
conference,
the
ECB
did
nothing
to
clarify
the
phrase

responsible
for
all
the
speculation.

During
his
opening
remarks,
the
ECB
President
announced
another
rate
cut,

framed
as
necessary
to
the
function
of
maintaining
price
stability.
He
also
went
on
to

lay
out
a
series
of
new,
non-‐standard
measures
that
would
be
applied
to
combat
the

crisis.

Chief
amongst
the
measures
was
the
extension
of
the
LTROs
to
a
three-‐year

cycle.
His
opening
remarks
were
concluded
with
another
call
for
a
new
fiscal

compact:

112
“Europe
at
Crossroads,”
Wall
Street
Journal,
December
6,
2011.

113

Stella
Dawson,
“Time
of
Reckoning
for
the
Euro
Zone,”
Reuters,
December
4,

2011,
http://www.reuters.com/article/2011/12/04/us-‐economy-‐global-‐
idUSTRE7B30RP20111204.

114

Catherine
Bremer
and
Stephen
Brown,
“Germany’s
Merkel
Fights
for
Euro,

Cameron
for
UK,”
Reuters,
December
2,
2011,

http://www.reuters.com/article/2011/12/02/us-‐eurozone-‐
idUSTRE7AR0P320111202.

42

Turning
to
fiscal
policies,
all
euro
area
governments
urgently
need
to
do
their

utmost
to
support
fiscal
sustainability
in
the
euro
area
as
a
whole.
A
new

fiscal
compact,
comprising
a
fundamental
restatement
of
the
fiscal
rules

together
with
the
fiscal
commitments
that
euro
area
governments
have

made,
is
the
most
important
precondition
for
restoring
the
normal

functioning
of
financial
markets.
115

Though
the
press
conference
was
used
to
roll
out
another
unprecedented

rate
cut
as
well
as
a
number
of
substantial
non-‐standard
measures,
the
media
was

mainly
interested
in
the
possibility
of
quantitative
easing.

During
the
course
of
the

Q
&
A,
Draghi
received
nine
questions
on
the
topic,
more
questions
than
on
any

other
topic.
116

In
response
to
the
line
of
questioning,
Draghi
again
invoked
the
treaty
as
the

reason
why
quantitative
easing
could
not
take
place
in
the
Eurozone.
However
this

time
his
deflection
included
a
pivot
complimenting
the
Bundesbank.
When
asks
why

the
ECB
could
not
function
like
the
Federal
Reserve
or
the
Bank
of
England,
he

answered
in
the
following
manner:

As
I
said
before,
we
have
a
Treaty
and
the
Treaty
states
what
our
primary

mandate
is,
namely
to
maintain
price
stability.
Also,
the
Treaty
prohibits

monetary
financing.
I
am
old
enough
to
remember
that,
when
this
Treaty
was

written
in
the
early
1990s,
some
of
the
countries
around
that
table
were

actually
doing
what
you
suggest
doing
now,
namely
some
of
the
central

banks
of
these
countries
were
financing
the
government
expenditure
of
their

governments
through
money
creation,
and
the
consequences
were
there
for

all
of
us
to
see.
That
is
why,
in
a
sense,
this
Treaty
embodies
the
best

115

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
December
8
th
,
2011,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2011/html/is111208.en.html.

116

Phillip
Y.
Domfeh,
“Text
Analysis.”
(Master’s
thesis,
University
of
Southern

California,
2013).

43

tradition
of
the
Deutsche
Bundesbank,
whereby
monetary
financing
has

always
been
prohibited.
117

Instead
of
proactively
clarifying
the
meaning
of
the
words
“other
elements

will
follow,”
Draghi
waited
until
a
journalist
prompted
him.

“When
I
referred
to
the

‘other
elements,’
what
I
meant
to
say
was
that
the
other
parts
of
the
fiscal
compact

will
fall
into
place
much
more
easily
once
the
fiscal
rules
are
enacted
and
are
in

place.”
118

Soon
after,
he
flippantly
dismissed
the
media
attention
the
phrase
had

garnered:
“By
the
way,
I
was
kind
of
surprised
by
the
implicit
meaning
that
was

given
by
not
all
of
the
press,
but
some,
to
that
“other
elements
will
follow”.
Let
me

step
back
and
talk
about
the
compact….”
119

The
casual
self-‐exoneration
of
Draghi
disappointed
the
investor
community

and
was
evident
in
the
surrounding
media
coverage.

One
headline
read
European

Shares
Fall
After
Draghi
Disappoints.
120

The
article
reported
the
turmoil
caused.

“Bank
stocks,
which
are
at
the
forefront
of
the
Eurozone
debt
crisis
due
to
their

exposure
in
the
region,
featured
among
the
worst
performers
after
Draghi's

117

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
December
8
th
,
2011,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2011/html/is111208.en.html.

118

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
December
8
th
,
2011,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2011/html/is111208.en.html.

119

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
December
8
th
,
2011,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2011/html/is111208.en.html.

120

Joanne
Frearson,
“European
Shares
Fall
After
Draghi
Disappoints,”
Reuters,

December
8,
2011,
http://www.reuters.com/article/2011/12/08/us-‐markets-‐
europe-‐stocks-‐idUSTRE7B70RU20111208.

44

comments,
with
the
STOXX
Europe
600
Banks
index
SX7P
down
3.1
percent.”
121

Other
negative
headlines
included,
EU
leaders
agree
on
fiscal
pact,
ECB
douses

hopes
122

and
European
Shares
Fall
after
Draghi
Douses
Hopes.
123

According
to
Gabriel
Kahn,
the
poor
market
reaction
was
a
response
to

Draghi’s
mismanagement
of
his
constituents:

Following
the
Dec
1
st

speech,
everyone
thought
he
would
engage
the
ECB
in

direct
bond
buying.

He
appeared
to
message
it,
however,
when
there
was
an

opportunity
to
act
at
the
following
press
conference
he
did
not.
[Draghi’s

constituents]
had
come
to
expect
aggressive
action
from
Draghi
and
the

market
immediately
showed
their
disappointment.
There
reaction
was
swift

and
severe.
124

The
ECB
President’s
strange
potential
backpedaling
could
not
have
come
at
a

worse
time.
On
the
same
day,
European
Leaders
were
at
the
EU
summit
attempting

to
hash
out
an
austerity
deal.
Although
a
reform
known
as
the
“6-‐pack”
was
agreed

upon
by
most
members,
there
was
not
enough
political
will
to
get
both
England
and

Portugal
to
agree
to
the
regulatory
terms.
125

121

Joanne
Frearson,
“European
Shares
Fall
After
Draghi
Disappoints,”
Reuters,

December
8,
2011,
http://www.reuters.com/article/2011/12/08/us-‐markets-‐
europe-‐stocks-‐idUSTRE7B70RU20111208.

122

Luke
Baker
and
Julien
Toyer,
“EU
Leaders
Agree
on
Fiscal
Pact,
ECB
Douses

Hopes,”
Reuters,
December
8,
2011,

http://www.reuters.com/article/2011/12/08/us-‐eurozone-‐
idUSTRE7B30AO20111208.

123

Joanne
Frearson,
“European
Shares
Fall
After
Draghi
Disappoints,”
Reuters,

December
8,
2011,
http://www.reuters.com/article/2011/12/08/us-‐markets-‐
europe-‐stocks-‐idUSTRE7B70RU20111208.

124

Gabriel
Kahn,
Interviewed
by
Phillip
Y.
Domfeh,
December
14,
2012,
Primary

Research
Interview,
transcript.

125

Encyclopedia
Britannica.
“Euro-‐zone
Debt
Crisis:
Timeline
of
Key
Events
in
the

European
Sovereign
Debt
Crisis.”
Last
Accessed
January
5,
2013.

http://www.britannica.com/EBchecked/topic/1795026/euro-‐zone-‐debt-‐
crisis/301861/Timeline-‐of-‐key-‐events-‐in-‐the-‐European-‐sovereign-‐debt-‐crisis.

45

Berlin

Following
the
December
press
conference,
Mario
Draghi
traveled
to
Berlin
to

deliver
a
speech
for
the
Ludwig
Erhard
Lecture
of
the
Lisbon
Council.
Draghi
was

invited
to
speak
at
the
lecture
series,
which
focused
on
economic
reform
in
Europe,

by
long
time
colleague
Hans
Tietmeyer.

At
the
beginning
of
his
speech,“The
euro,

monetary
policy
and
the
design
of
a
fiscal
compact,”
he
acknowledged
Tietmayer,

using
the
German
economist
to
demonstrate
his
connection
to
the
ideals
of
German

banking
and
reinforce
their
guiding
presence:

When
I
was
working
at
the
Italian
Treasury
in
the
1990s,
Professor

Tietmeyer
and
I
had
many
opportunities
to
work
together.
I
vividly

remember
many
of
our
exchanges
over
the
course
of
the
two
decades
since

the
Maastricht
Treaty.
And
I
am
very
grateful
that
he
remains
in
close
contact

with
the
European
Central
Bank
as
adviser
to
our
audit
committee.
126

He
further
went
on
to
explain,
as
he
had
done
many
times,
that
many
of
the
ideas
of

the
ECB
came
directly
from
the
Bundesbank.

As
with
all
of
his
recent
speaking
engagements,
he
defended
the
interest
rate

cuts,
and
explained
the
necessity
of
non-‐standard
measures
like
the
three
years

extension
to
the
LTROs.
He
also
advocated
for
the
new
fiscal
compact
and
validated

steps
taken
toward
it
in
the
form
of
the
“6-‐pack.”
While
consistent,
his
advocacy

could
at
times
be
shallow.
His
speech
in
Berlin
was
none
such
since
on
that
occasion

he
gave
historical
context
to
defense
of
his
stance:

126

Mario
Draghi.
“The
Euro,
Monetary
Policy
and
the
Design
of
a
Fiscal
Compact.”

Lecture
at
Ludwig
Erhard
Lecture,
Berlin,
Germany,
December
15,
2011.

46

Yet
the
implementation
of
the
Stability
and
Growth
Pact
has
not
been
good

enough.
As
the
Federal
Chancellor
of
Germany
recently
remarked,
the
Pact

has
been
broken
60
times
over
the
past
12
years.
So
we
clearly
have
work
to

do
to
prevent
this
happening
again.
The
new
set
of
rules
for
economic
and

fiscal
surveillance
known
as
the
six-‐pack
–
which
was
approved
by
the

European
Parliament
earlier
this
year
–
will
certainly
strengthen
the

implementation
of
the
rules.
127

The
added
context
made
the
appeal
more
substantial.

The
overall
tone
of
the
speech
was
positive
and
quite
German
centric.
He

stated
that
the
“six-‐pack,”
decided
upon
at
the
Euro
Summit,
was

a
“breakthrough

for
clear
fiscal
rules
for
our
monetary
union.”
128

In
an
attempt
to
reach
his
audience,

Draghi
began
the
speech
by
validating
the
work
of
Ludwig
Erhard
and
his

contributions
to
the
banking
world
while
also
ending
his
speech
with
a
quote
from

the
German
policy
maker.

The
speech
received
minimal
coverage,
as
it
did
not
divulge
any
new

information.

The
attention
garnered
did
however
highlight
his
uplifting
tone.
The

Reuters
article,
ECB
Chief
Says
Euro
Zone
the
Right
Track,
stated
the
ECB
President

was
confident
that
the
Eurozone
was
fixed
down
a
positive
course.
129

127

Mario
Draghi.
“The
Euro,
Monetary
Policy
and
the
Design
of
a
Fiscal
Compact.”

Lecture
at
Ludwig
Erhard
Lecture,
Berlin,
Germany,
December
15,
2011.

128

Mario
Draghi.
“The
Euro,
Monetary
Policy
and
the
Design
of
a
Fiscal
Compact.”

Lecture
at
Ludwig
Erhard
Lecture,
Berlin,
Germany,
December
15,
2011.

129

Alexandra
Hudson
and
Robin
Emmott,
“ECB
Chief
Says
Euro
Zone
on
Right

Track,”
Reuters,
December
15,
2011,

http://www.reuters.com/article/2011/12/15/us-‐eurozone-‐
idUSTRE7BE1IP20111215.

47

Back
in
Brussels:
Tightening
the
Hatch

On
December
19
th
,
Draghi
returned
to
the
European
Parliament,
appearing

before
the
Committee
on
Economic
and
Monetary
Affairs.
This
would
mark
the

fourth
public
speaking
event
that
month,
twice
as
many
as
in
November.

In
contrast
to
the
drama
surrounding
his
previous
speaking
engagements,

Draghi’s
final
remarks
in
December
were
quite
conservative
and
offered
no
new

information.
The
speech
followed
the
similar
outline:
A
justification
of
the
interest

rate
cuts,
an
explanation
of
non-‐standard
measures
and
a
call
for
a
fiscal
compact.

The
speech
drew
very
few
headlines.
Reuters
only
published
five
articles

referencing
the
speech,
three
of
which
only
regurgitated
highlights
from
the
speech

with
no
interpretation.
130

Eurozone
Pursues
IMF
Lending
Plan,
Draghi
Inscrutable

said
it
plainly,
“Draghi
gave
no
new
signal
on
ECB
bond-‐buying
program.”
131

As
a

result
of
the
lack
of
new
information,
the
markets
remained
fundamentally
stable.

On
the
same
day,
an
interview
with
Mario
Draghi
was
published
in
the

Financial
Times.
Similar
to
his
speech,
the
interview
offered
no
new
insight.
In
the

interview,
he
outlined
the
actions
being
taken
by
the
ECB
to
address
the
debt
crisis

and
did
the
same
defensive
dance
as
was
done
previously
with
the
price
stability

130

Phillip
Y.
Domfeh,
“Text
Analysis.”
(Master’s
thesis,
University
of
Southern

California,
2013).

131

“WRAPUP
4-‐
Eurozone
Pursues
IMF
Lending
Plan,
Draghi
Inscrutable,”
Reuters,

December
19,
2011,
http://www.reuters.com/article/2011/12/19/eurozone-‐
idUSL6E7NJ01820111219.

48

mandate
and
the
treaty
of
Lisbon.
The
most
interesting
answer
came
when
asked
if

the
3-‐year
LTRO
was
a
European
version
of
quantitative
easing
to
which
he

responded:

Each
jurisdiction
has
not
only
its
own
rules,
but
also
its
own
vocabulary.
We

call
them
non-‐standard
measures.
They
are
certainly
unprecedented.
But
the

reliance
on
the
banking
channel
falls
squarely
in
our
mandate,
which
is

geared
towards
price
stability
in
the
medium
term
and
bound
by
the

prohibition
of
monetary
financing
[central
bank
funding
of
govern-‐

ments].
132

The
sly
equating
of
LTROs
to
quantitative
easing
was
not
enough
to
stimulate

any
market
response.

After
December
19
th
,
there
would
be
no
more
communication
made
from
the

ECB
for
the
rest
of
the
year.
Not
even
other
executive
board
members
would
give

remarks.
The
first
few
weeks
of
December
had
left
the
ECB
and
its
President

overexposed.

The
ECB
needed
to
stop
talking
about
the
actions
underway
and
to

actually
implement
them.
Two
days
later
on
December
21
st
,
the
ECB
allocated
€
489

billion
in
loans
to
more
than
500
European
banks
through
the
LTROs
with
an

interest
rate
of
1%.
133

Even
though
the
measure
was
not
as
appealing
to
certain

investors
as
quantitative
easing,
it
prevented
a
major
credit
freeze
in
the

132

Mario
Draghi,
interview
by
Ralph
Atkins
and
Lionel
Barber,
Financial
Times,

December
14,
2011.

133

“Banks
Gorge
on
ECB
Loans,
Market
Cheer
Short-‐lived,”
Reuters,
December
21,

2011,
http://www.reuters.com/article/2011/12/21/us-‐ecb-‐3yr-‐loans-‐
idUSTRE7BK0MC20111221.

49

Eurozone.
134

The
coffers
of
the
institution
had
been
ripped
wide
opened.

Yet,
its

main
mouthpiece
would
remain
silent
for
weeks.

134

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
January
12,
2012,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120112.en.html.

50

Act
6

January
2012:
Silence

The
ECB
was
silent
for
three
weeks
with
the
exception
of
the
issuing
of
two

press
releases
unrelated
to
the
crisis.

Forces
beyond
their
control
continued
to

affect
the
Eurozone.
On
January
5
th
,
the
Euro
fell
to
its
lowest
level
against
the
dollar

since
September
2010.
135

Despite
the
troubling
news,
the
beginning
of
January
would
also
offer
some

inspiration.
Four
days
later,
Angela
Merkel
and
Nicholas
Sarkozy
hosted
a
round

table
in
Berlin
aimed
at
providing
a
solution
to
the
ongoing
debt
crisis.
136

During

these
meetings,
the
two
leaders
pressured
Greece
and
its
bondholders
to
agree
upon

a
reduction
of
the
country’s
debt
burden.
Following
such
an
agreement
coupled
with

austerity
cuts,
bailout
loans
would
be
made
available
to
the
ailing
region.

Also
Jürgen
Stark,
a
key
member
of
the
executive
board
and
a
German

economist
was
replaced.
137

On
the
12
th

of
the
month,
roughly
three
weeks
after
the
Draghi
had
spoken
in

Brussels,
the
President
presided
over
the
ECB’s
January
press
conference.
Draghi’s

opening
remarks
mirrored
that
of
his
last
two
speeches
in
December,
however,
each

135

“FOREX-‐Euro
Falls
Broadly,
Funding
Worries
Persist,”
Reuters,
January
5,
2012,

http://www.reuters.com/article/2012/01/05/markets-‐forex-‐
idUSL6E8C52EC20120105.

136
Wall
Street
Journal,
“Euro
Zone
Debt
Crisis
Timeline.”
Last
accessed
March
3,

2013,

http://online.wsj.com/article/SB100014240529702043948045770123628449806
18.html.

137

Peter
Müller
et
al.
“ECB
Chief
Economist
Quits:
Jürgen
Stark’s
Resignation
is

Setback
for
Merkel,”
SPIEGEL
ONLINE,
September
12,
2011,

http://www.spiegel.de/international/europe/ecb-‐chief-‐economist-‐quits-‐juergen-‐
stark-‐s-‐resignation-‐is-‐setback-‐for-‐merkel-‐a-‐785668.html.

51

in
a
different
way.
Similar
to
his
speech
in
Berlin,
Draghi
maintained
a
positive

outlook
on
the
economy
and
the
state
of
the
Euro
and,
akin
to
his
speech
in
Brussels,

no
new
information
was
presented.
The
only
fresh
announcement
given
was
that

the
ECB
would
maintain
the
interest
rate
set
in
December
for
the
month
of
January.

The
calm
and
restrained
demeanor
was
likely
due
to
the
successful

implementation
of
the
3
Years
LTROs
that
had
proven
to
be
effective:

The
extensive
recourse
to
the
first
three-‐year
refinancing
operation
indicates

that
our
non-‐standard
policy
measures
are
providing
a
substantial

contribution
to
improving
the
funding
situation
of
banks,
thereby
supporting

financing
conditions
and
confidence.
138

Speculation
regarding
an
austerity
deal
in
Greece
was
chief
amongst
the

journalists
inquiries
during
the
Q
and
A
section.
Questions
regarding
Greece
were

highest
while
the
next
largest
group
of
questions
focused
on
the
three
year
LTRO

program
139
.

In
addition
to
austerity,
the
major
focus
of
the
questions
on
Greece

emphasized
Private
Sector
Involvement
(PSI).
Some
economists
saw
the

involvement
of
the
private
sector
in
fighting
the
crisis
as
a
misstep.
Draghi
generally

refused
to
speculate
but
was
uncharacteristically
open
regarding
his
thoughts
on

PSI
and
its
place
in
Greece’s
debt
restructuring:

I
have
said
already,
the
PSI
was
an
understandable
political
response
to
the

situation.
But
it
had
unintended
consequences,
the
measure
of
which
went

138

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
January
12,
2012,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120112.en.html.

139

Phillip
Y.
Domfeh,
“Text
Analysis.”
(Master’s
thesis,
University
of
Southern

California,
2013).

52

over
and
above
any
expectation
at
that
time.
I
think
everybody
has
realized

that
we
certainly
do
not
want
to
have
any
PSI
in
the
future.
140

Despite
the
brief
moment
of
openness,
Draghi
returned
to
his
more
cryptic

approach
answers
when
asked
if
the
Euro’s
falling
exchange
rate
would
some
how

benefit
the
Eurozone,
“With
regard
to
the
exchange
rate,
as
you
know,
I
never

comment
on
exchange
rates…
We
will
consult
closely
with
regard
to
actions
in

exchange
rates,
and
we
will
cooperate
as
appropriate.”
141

The
January
press
conference
displayed
a
shift
in
the
press’
interest
from

quantitative
easing
to
the
Long
Term
Refinancing
Operations.
While
in
December

Draghi
was
asked
nine
questions
regarding
being
a
lender
of
last
resort,
such

questions
dropped
noticeably
to
two.
142

Following
his
December
1
st

speech,
Draghi

had
used
every
public
speaking
engagement
to
aggressively
position
the
institution

as
fiscally
conservative.
It
seemed
that
the
message
was
finally
permeating
the

media’s
expectations.

The
reaction
to
the
press
conference
was
positive
in
both
the
press
and
the

markets.
The
Euro
reached
its
weekly
high
following
the
meeting
and
the
narrative

carried
by
the
media
was
again
that
Draghi
believed
the
Eurozone
was
heading
in

the
right
direction.
In
the
article,
Euro
Bounces
Back,
boosted
by
auctions,
Draghi,
the

140

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
January
12,
2012,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120112.en.html.

141

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
January
12,
2012,”
Accessed
October
15,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120112.en.html.

142

Phillip
Y.
Domfeh,
“Text
Analysis.”
(Master’s
thesis,
University
of
Southern

California,
2013).

53

ECB
president
was
referenced
as
being
“upbeat.”

Both
ECB’s
Draghi
Says
Some
Signs

of
Euro
Zone
Stabilization
143

and
World
Stocks
Edge
Higher
as
Debt
Fears
Lessen

included
a
quote
from
Jonathan
Lewis,
a
Chief
Investment
Officer
at
Samsan
Capitol

Investors,
interpreting
Draghi’s
behavior:

"The
ECB's
decision
to
hold
rates
steady

at
1
percent
is
enough
sign
of
confidence
that
European
financial
leaders
believe
the

Eurozone
economy
will
stabilize
and
the
crisis
can
be
managed.”
144

Despite
the
positive
outlook,
neither
Draghi
nor
any
other
executive
board

members
spoke
in
public
following
the
press
conference.
Sadly,
the
positivity
was

short
lived.
The
following
day,
Standard
&
Poors
downgraded
the
credit
rating
of
9

Eurozone
countries
including
France,
Austria,
Spain,
Italy
and
Portugal.
145

In

response
Portugal’s
10-‐year-‐bonds
hit
record
high
yield,
skyrocketing
to
18.29%.
146

Fearful
that
talks
had
stalled
between
Greece
and
their
private-‐sector

creditors,
finance
ministers
throughout
the
Eurozone
descended
again
upon

Brussels
on
January
23rd
in
hopes
of
finding
a
solution
through
a
bailout
deal.
147

143

“ECB’s
Draghi
Says
Some
Signs
of
Euro
Zone
Stabilization,”
Reuters,
January
12,

2013,
http://www.reuters.com/article/2012/01/12/us-‐ecb-‐rates-‐draghi-‐
idUSTRE80B0XV20120112.

144

Gertrude
Chavez-‐Dreyfuss,
“Euro
Bounces
Back,
Boosted
by
Auctions,
Draghi,”

Reuters,
January
12,
2012,
http://www.reuters.com/article/2012/01/12/us-‐
markets-‐forex-‐idUSTRE7AC15W20120112.

145

Matthias
Sobolewski
and
Dina
Kyriakidou,
“S&P
Downgrades
Nine
Euro
Zone

Countries,”
Reuters,
January
14,
2012,

http://www.reuters.com/article/2012/01/14/us-‐eurozone-‐sp-‐
idUSTRE80C1BC20120114.

146

“Portugal’s
Bond
Yields
Rise
Sharply
After
Rating
Cut
to
Junk,”
Wall
Street

Journal,
January
16,
2012,
http://online.wsj.com/article/BT-‐CO-‐20120116-‐
705871.html.

147
Wall
Street
Journal,
“Euro
Zone
Debt
Crisis
Timeline.”
Last
accessed
March
3,

2013,

http://online.wsj.com/article/SB100014240529702043948045770123628449806
18.html.

54

On
January
30
th
,
European
leaders
also
met
once
again
in
Brussels
to
finalize

the
new
fiscal
compact
that
had
been
proposed
in
December
of
the
previous
year.

The
new
treaty
included
significant
financial
guidelines
and
disciplinary
actions
and

was
ratified
by
EU
members
to
the
exclusion
of
The
United
Kingdom
and
the
Czech

Republic.

Despite
all
of
the
events
that
took
place,
the
Mario
Draghi
and
the
European

Central
Bank
remained
silent
until
February
9
th
.

55

Act
7

February
2012:
Endgame

The
month
of
February
saw
the
ECB
begin
to
more
actively
engage
in
the

public
square.
Prior
to
the
press
conference
held
on
February
9
th
,
French
economist

and
ECB
board
member,
Benoît
Cœuré,
spoke
at
the
BIS-‐ECB
Workshop
on
Global

liquidity
and
its
international
repercussions
in
Frankfurt.
The
communications
door

was
slowly
but
surely
opening
again.

Greece,
under
the
leadership
of
Prime
Minister
Papademos,
inching
ever

closer
to
the
type
of
commitment
to
austerity
that
had
been
desired
four
months

prior,
would
open
the
liquidity
floodgates.
A
meeting
meant
to
finalize
the

restructuring
was
set
for
February
4
th
.
Serendipitously,
this
would
also
be
the
same

day
as
the
ECB
press
conference.
It
was
speculated
that
the
ECB
would
make
some

sort
of
announcement
in
support
Greece
and
the
deal.
According
to
Mario
Blinks,
in

an
article
published
in
The
Economist
one
day
before
the
press
conference,
it
was

thought
by
some
that
the
ECB
would
be
willing
to
takes
losses
on
Greek
bonds
the

ECB
had
purchased
under
Jean-‐Claude
Trichet.
148

Draghi’s
remarks
were
quite
similar
to
those
of
the
months
before,
however

there
was
in
fact
one
slight
but
important
change.

During
the
first
three
press

conferences
of
his
presidency,
Draghi
had
referred
to
the
downside
risk
of
the

148

“Mario
Blinks,”
The
Economist,
February
8,
2012,

http://www.economist.com/blogs/freeexchange/2012/02/euro-‐crisis-‐
4?zid=295&ah=0bca374e65f2354d553956ea65f756e0.

56

economy
of
as
“substantial,”
that
word
was
absent
in
his
February
opening

statements.
149

During
the
Q
&
A,
members
of
the
press
were
transfixed
on
Greece.
As
was

his
habit,
Draghi
refused
to
speculate
on
the
deal
currently
underway.
He
did

nonetheless
mention
that
he
had
spoken
with
the
Greek
prime
minister
prior
to
the

press
conference
and
that
the
conversation
resulted
in
positive
news:

On
Greece,
I
am
sorry
but
I
cannot
say
anything
about
how
holdings
of
Greek

bonds,
both
under
the
SMP
programme
and
under
national
central
banks’

other
holdings
will
be
treated.
What
I
can
say,
however,
is
that,
a
few
minutes

ago,
I
received
a
call
from
the
Prime
Minister
of
Greece
saying
that
an

agreement
has
been
reached
and
endorsed
by
the
major
parties.
This

afternoon
we
will
be
having
the
Eurogroup
meeting
with
the
ministers
and

we
will
have
a
full
report
of
the
agreement,
and
also
a
discussion
of
the

further
steps.
150

Despite
his
restraint,
Draghi
had
indeed
announced
that
Greek
parliamentary

leaders
had
agreed
to
some
incarnation
of
an
austerity
deal.

There
was
cause
for

celebration
even
though
the
ECB
President
played
the
rest
of
the
press
conference

equally
close
to
the
chest.

The
media
picked
up
the
reserved
and
measured
reaction
of
the
ECB
to
the

good
news.
In,
The
ECB
Opens
Doors
to
Indirect
Greek
Aid,
the
writer
characterized

149

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
February
9,
2012,”
Accessed
December
24,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120209.en.html.

150

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
February
9,
2012,”
Accessed
December
24,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120209.en.html.

57

Draghi
as
“refusing
to
show
his
hand.”
151

The
Economist
article
entitled
Modest

Mario
also
highlighted
his
inscrutability,
“what
kind
of
role
the
ECB
will
play
in
the

new
deal
remained
unclear.”
152

The
article
also
stated
that
Mario
Draghi
was
“not-‐
committal.”

The
intentions
of
Draghi
were
not
considered
a
mystery
to
all.

In,
Greece

Deal
Fails
to
Convince,
EU
Demands,
the
writer
believed
that
Draghi
“hinted
[that]

the
central
bank
could
provide
indirect
help
without
breaching
a
treaty
ban
on

financing
governments.”
153

The
speculation
that
the
ECB
would
be
willing
to
help
Greece
was
likely

based
upon
one
of
Draghi’s
more
cryptic
answers
during
the
press
conference.

When
asked
regarding
the
institutions
potential
involvement
he
said,
"If
the
ECB

gives
money
to
governments,
that's
monetary
financing.
If
the
ECB
distributes
part

of
its
profits
to
its
member
countries
as
part
of
the
capital
key,
that's
not
monetary

financing.”
154

On
the
February
20
th
,
Eurozone
finance
minsters
met
to
hash
out
the

final
details
of
the
debt
restructuring
and
bailout
plan.
On
the
following
day,
the

151

“UPDATE
5-‐
ECB
opens
door
to
indirect
Greece
Aid,”
Reuters,
February
9,
2012,

http://www.reuters.com/article/2012/02/09/ecb-‐rates-‐
idUSL5E8D90YQ20120209.

152

“Modest
Mario,”
The
Economist,
February
9,
2012,

http://www.economist.com/blogs/freeexchange/2012/02/euro-‐crisis-‐5.

153

Jan
Strupczewski
and
Renee
Maltezou,
“Greece
Deal
Fails
to
Convince,
EU

Demands
More,”
Reuters,
February
9,
2012,

http://www.reuters.com/article/2012/02/09/us-‐greece-‐
idUSTRE8120HI20120209.

154

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
February
9,
2012,”
Accessed
December
24,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120209.en.html.

58

Greek
government
had
approved
a
nearly
50%
budget
cut
and
received
€130
billion

in
bailout
funds
from
the
ECB,
EU
and
the
IMF.
155

Initially,
markets
responded
very

positively,
however
the
elation
was
short-‐lived
following
the
possibility
of
an

uncontrolled
Greek
debt
default.
156

Draghi’s
tempered
response
was
retroactively

justified.

Despite
the
feared
default,
a
Greek
deal
had
still
been
struck
and
the

Eurozone
was
far
closer
to
a
fiscal
union
following
the
ratification
of
the
“6-‐pack.”

On
the
February
24
th
,
both
The
Wall
Street
Journal
and
the
Frankfurt-‐based
financial

daily
Frankfurter
Allgemeine
Zeitung
published
interviews
they
conducted
with
the

ECB
president.
In
each
respective
interviews,
Draghi
was
far
more
open
regarding

his
thoughts
on
the
Greek
debt
restructuring
and
the
state
of
the
Euro
to
a
greater

extent
than
he
had
previous
been
during
his
first
100
days
as
president.
On
the
final

day
of
February,
the
LTROs
released
€530
billion
to
800
banks
in
the
Eurozone,

increasing
liquidity,
encouraging
lending
and
stimulating
the
economy.
157

155
Wall
Street
Journal,
“Euro
Zone
Debt
Crisis
Timeline.”
Last
accessed
March
3,

2013,

http://online.wsj.com/article/SB100014240529702043948045770123628449806
18.html.

156

Stephen
Castle,
“Europe
Agrees
on
New
bailout
to
Help
Greece
Avoid
Default,”

New
York
Times,
February
20,
2012.

157

“Euro-‐zone
Debt
Crisis:
Timeline
of
Key
Events
in
the
European
Sovereign
Debt

Crisis.”
Last
Accessed
January
5,
2013,

http://www.britannica.com/EBchecked/topic/1795026/euro-‐zone-‐debt-‐
crisis/301861/Timeline-‐of-‐key-‐events-‐in-‐the-‐European-‐sovereign-‐debt-‐crisis.

59

Act
8

Analysis:
The
Balancing
Act

It’s
a
Matter
of
Interpretation

During
an
interview
with
The
Financial
Times,
Mario
Draghi
was
asked
why

he
believed
Article
123
of
the
Lisbon
Treaty
stipulated
that
there
was
a
limit
to
the

amount
of
bonds
the
ECB
could
purchase.
Though
the
treaty
was
used
as
a
primary

defense
against
the
mounting
pressures
of
Eurozone
leaders
to
engage
in

quantitative
easing,
it
did
not
specifically
state
that
bond
purchases
could
not
pass
a

specific
number.
His
response
to
the
question
was
simply
that
being
a
lender
of
last

resort
went
against
the
“spirit”
of
the
treaty.
158

Draghi’s
answer
was
not
rooted
in
fact,
rather,
it
was
rooted
in
a
conservative

interpretation
and
understanding
of
the
Treaty
of
Lisbon
and
while
his
opinion

mattered
more
than
many
others,
it
was
still
a
matter
of
political
spin.

Similarly
so,
the
answer
to
the
question
“Did
the
European
Central
Bank

communicate
effectively
during
the
first
100
days
of
Mario
Draghi’s
Presidency?”
is

directly
linked
to
one’s
ideals
regarding
the
ECB’s
role
in
the
European
Sovereign

Debt
Crisis.

Depending
on
whether
you
believe
that
ECB
should
be
more
active
in

terms
of
lending
money
and
buying
bonds
or
if
you
believe
that
Eurozone
countries

should
be
sawing
off
their
legs
and
sacrificing
their
first
born
to
the
god
of
austerity.

Either
position
will
heavily
impact
the
conclusions
drawn
when
observing
their

behavior.

In
short,
the
truth
is
hard
to
see.

158

Mario
Draghi,
interview
by
Ralph
Atkins
and
Lionel
Barber,
Financial
Times,

December
14,
2011.

60

That
being
said,
his
behavior
is
not
beyond
understanding.

In
the
public

relations
profession,
it
is
commonly
believed
that
communication
practices
of
an

institution
should
support
the
primary
goal
of
the
organization
providing
that
they

are
ethical
159
.
With
such
a
framework,
certain
parameters
can
be
established
by

which
an
understanding
of
the
effectiveness
of
the
ECB’s
chief
communications
tool

can
be
surmised.

The
effectiveness
of
the
institution
can
be
known
by
answering

the
question,
“Did
the
communications
of
the
ECB
help
the
institution
accomplish
its

primary
objective
of
maintaining
price
stability
and
avoid
the
breakup
of
the

Eurozone?”
Although
the
main
way
price
stability
was
attempted
to
be
maintained

was
through
operational
means
i.e.
interest
rate
cuts
and
the
implementation
of

non-‐standard
measures,
an
argument
can
be
made
that
the
clear
and
concise

dissemination
of
information
via
Draghi’s
press
conferences
helped
accomplish
this

ultimate
goal.
By
delivering
information
in
the
same
structural
format
of
his

predecessor
and
adopting
the
language
used
by
Jean-‐Claude
Trichet,
Mario
Draghi

was
able
to
relay
information
in
a
stable
and
sometimes
boring
capacity.

These

communications
modeled
the
desired
peaceable
nature
of
the
price
stability.
The

character
traits
of
their
press
conferences
actually
embodied
the
continuity
and

credibility
mentioned
by
Draghi
during
his
speech
at
Frankfurt
Congress.

Though
it
would
seem
like
an
open
and
shut
case,
the
matter
of
analyzing

their
chief
communication
tactic
is
far
more
complex.
As
Draghi
was
often
quick
to

159
PRSA.
“Communicating
Public
Relations
Values:
Business
Value
and
Public
Good

are
Essence
of
PR
Today.”
2009,

http://www.prsa.org/Intelligence/BusinessCase/Communicating_Public_Relations_
Value.

61

mention,
one
policy
is
not
enough
to
create
price
stability
and
can
easily
be

hampered
by
the
economic
policies
of
a
specific
Eurozone
country.
This
was
often

the
justification
of
the
need
for
non-‐standard
measures
and
the
fiscal
compact.
The

ECB
could
not
dictate
the
implantation
of
their
monetary
policies
because
economic

policies
of
each
country
were
diverse
and
out
of
their
jurisdiction.
Similarly
so,
the

practice
of
clear
and
stable
communication
was
sufficient
enough
to
accomplish
the

institution’s
goal.

Their
clear
communication
was
supplemented
by
a
constant
call

to
action
just
as
their
monetary
policy
was
aided
by
their
non-‐standard
measures.

The
consistent
advocacy
moved
government
leaders
and
policy
makers
to
action,

bringing
closer
the
realization
of
necessary
reforms
that
would
in
turn
move
the

Eurozone
closer
towards
price
stability.
When
analyzing
the
result
of
such
a
tactic

on
the
on
the
ECB’s
bottom-‐line,
it
can
be
argued
that
this
practice
was
also
very

effective.
Both
Italy
and
Greece’s
leadership
were
replaced
with
policy
makers

willing
to
make
cuts
and
agree
to
a
fiscal
compact
and
a
Greek
debt
deal
that
could

not
be
struck
in
October
was
finalized
in
late
February.

The
strategic
placement
of
Draghi’s
speaking
engagements
was
equally

important
to
the
actual
words
he
said.
While
other
executive
board
members
were

deployed
throughout
the
Eurozone
and
the
western
world,
going
as
far
as
Dallas
and

Chicago,
Draghi’s
engagements
were
limited
to
Brussels,
Frankfurt
and
Berlin

during
this
time
period.
These
locations
were
strategic,
as
Brussels
was
where
the

EU
was
headquartered,
Berlin
the
capital
of
the
most
powerful
country
in
the

Eurozone
and
Frankfurt
its
financial
capital.

62

It’s
a
Matter
of
Speculation

The
most
effective
of
all
of
Draghi’s
speaking
engagements
during
the
first

100
days
was
his
initial
visit
to
the
European
Parliament
as
ECB
President.

In

addition
to
the
understanding
tone
struck
during
his
first
visit,
much
of
the
weight

and
power
came
from
his
fresh
occupation
of
the
office.

Nonetheless,
the

sympathetic
tone,
a
drastic
change
from
the
attack
unleashed
at
the
Frankfurt

Congress,
positioned
the
ECB
as
a
willing
part
of
the
team
instead
of
a
critical

outside
observer.
The
emphatic
language
used
was
also
responsible
for
the
speech’s

power
as
it
also
broke
from
Draghi’s
generally
dry
remarks.
Most
importantly,

however,
was
the
cryptic
language
of
“more
efforts
may
follow”
which
tantalized
EU

leaders
and
moved
them
to
action,
garnered
large
media
attention,
and
gained
the

attention
of
the
financial
sector.
No
remarks
given
by
the
president
during
this
first

100
days
had
the
same
dramatic
effect.

Though
the
speech
showed
a
mastery
of
compelling
language
and
audience

anticipation,
Draghi’s
reaction
to
the
media
circus
surrounding
his
cryptic
language

was
poor.

Aside
from
speculation,
it
is
difficult
to
tell
whether
or
not
Draghi
was

actually
referencing
some
sort
of
“quantitative
easing”
plan
or
if
in
fact
he
was

simply
hinting
at
the
non-‐
standard
measures
which
he
would
unveil
at
that
month’s

press
conference.
Regardless,
allowing
speculation
to
grow
unchecked
was

irresponsible
and
worked
against
the
institution
in
the
long
run.
The

disappointment
that
followed
destabilized
the
markets,
weakened
the
resolve
of

63

Eurozone
leaders
fighting
for
a
fiscal
compact,
thus
making
price
stability
more

difficult
to
attain.

The
simple
issuing
of
a
press
release
addressing
the
speculation
and

clarifying
Draghi’s
language
prior
to
the
December
press
conference
would
have

been
sufficient
and
painless
in
comparison.
Even
addressing
the
matter
during
his

opening
remarks
would
have
been
better
than
the
flippant
dismissal
he
eventually

gave.
Such
communication
is
reckless
and
unhealthily
prioritizes
mystique.
As
the

communications
department
of
the
ECB
falls
directly
under
Draghi’s
jurisdiction,
it

can
be
safely
surmised
that
the
final
decision
regarding
handling
the
situation
was

his.

It
cannot
be
known
beyond
the
shadow
of
doubt
if
Draghi’s
comments
were

actually
referencing
quantitative
easing
in
his
first
European
Parliament
visit.

That

being
said,
the
strong
pivot
he
made
following
the
December
8
th

press
conference

towards
German
banking
ideals,
the
resignation
of
German
bankers
from
the

executive
board,
and
the
fact
that
the
rate
cut
in
December
was
not
unanimous

could
lead
one
to
believe
that
he
was
considering
the
last-‐ditch
practice
but
in
the

process
had
somehow
jeopardized
his
relationship
with
his
German
constituents.

Although
Draghi
defended
against
the
misinterpretation
of
his
words
with

what
seemed
to
be
little
care,
his
consequent
actions
told
a
different
story.
Draghi

was
constantly
in
the
news
during
December,
giving
many
speeches
and
his
first

interview.

Though
the
misunderstanding
was
never
directly
addressed,
each

speech’s
focus
on
non-‐standard
measures
further
downplayed
the
possibility
of

quantitative
easing.
More
importantly,
the
fiscal
compact
was
an
ideal
greatly

64

supported
by
his
German
constituents.
Slowly
yet
surely,
these
events
began

changing
the
press
narrative.
By
the
January
press
conference,
speculation

regarding
quantitative
easing
had
dropped
significantly,
and
a
more
traditional

banking
stance
had
been
further
cemented.

The
relative
silence
of
January
could
be
seen
as
reactionary
to
the

overexposure
of
the
previous
month.
The
behavior
embodied
the
policy
of
most

institutions
of
that
nature
when
facing
trouble
controlling
media
narrative:
they

lock
the
doors
and
hide.
Whether
the
silence
was
damaging
or
helpful
is
a
matter
of

interpretation.
Even
though
the
month
of
January
saw
the
Eurozone
subject
to
a

number
of
tumultuous
events,
the
final
emergence
of
the
ECB
in
January
at
the
press

conference
was
well
received
by
the
markets,
having
had
the
success
of
the
LTROs

speak
for
them.

Autonomy
is
the
Real
Priority

Whether
or
not
the
lack
of
clarity
regarding
the
phrase
“other
actions
may

follow”
may
have
worked
against
the
ECB’s
primary
objective
of
maintaining
price

stability,
the
words
were
likely
in
service
to
the
ghost
objective
of
the
institution
-‐-‐

maintaining
autonomy
and
not
being
directly
subject
to
the
demands
of
Eurozone

leaders.

Almost
equally
important
to
the
central
bank
as
low
inflation
was
their

independence.

It
was
this
freedom
that
allowed
them
to
do
whatever
was
deemed

necessary
to
achieve
their
primary
goal.
Draghi’s
answers
almost
always
served
to

65

keep
as
much
independence
from
any
school
of
thought
or
action,
effectively

managing
the
expectations
of
shareholders
regarding
the
institution.

Outside
of
the
ECB’s
dedication
to
honoring
their
bylaws,
the
ECB
rarely

committed
to
doing
anything.
This
allowed
them
to
be
flexible
in
their
response
to

the
ever-‐evolving
crisis.

Without
hesitation,
Draghi
would
answer
no
comment
to
any
question

potentially
revealing
too
much
of
the
institution’s
internal
process
or
painting
them

into
a
corner.
When
asked
about
the
future
of
the
SMP,
a
controversial
non-‐standard

procedure,
he
simply
said
that
it
was
not
infinite.
Regularly,
he
would
present
an

answer
with
“we
never
pre-‐commit.”
160

When
asked
if
the
same
tactics
implemented
to
help
Greece
would
be

repeated
to
help
Italy,
Spain,
Ireland
or
Portugal
if
they
were
found
in
the
same

situation,
Draghi
stated
Greece
was
“unique”
and
that
each
country
would
be

addressed
separately.
161

A
veil
was
always
kept
up,
hiding
the
ECB’s
future
plans.

The
purpose
behind
this
was
likely
to
stave
off
the
expectations
of

institutions
powerful
constituents.

The
ECB
was
an
independent;
yet
it
was
often
pressured
to
act
by
audiences

with
differing
expectations.
From
Weidmann
to
Papademos,
no
stakeholder’s

desires
could
fully
be
dismissed.
As
a
result,
Draghi’s
mystique
allowed
him
to

balance
various
competing
desires
while
attempting
to
achieve
his
own
ends.

160

European
Central
Bank.
“Introductory
Statement
to
the
Press
Conference
(with

Q&A)
February
9,
2012,”
Accessed
December
24,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120209.en.html.

161

A)
February
9,
2012,”
Accessed
December
24,
2012,

https://www.ecb.int/press/pressconf/2012/html/is120209.en.html.

66

His
mysterious
nature
might
have
also
allowed
him
to
seem
as
if
he
knew

more
than
he
did
in
actuality.
According
to
USC
Professor
Gabriel
Kahn,
the
use
of

mystery
was
a
tactic
commonly
implored
by
central
bankers,
including
the
U.S.

Federal
Reserve’s
Alan
Greenspan:

Alan
Greenspan
was
famous
for
using
mystery
for
his
own
purposes.
People

would
hang
onto
every
word
because
they
could
not
interpret
what
he
was

saying.
He
used
this
as
part
of
his
communications
strategy,
turning

enigmatic
dialogue
into
an
all-‐knowing
presence.
People
just
assumed
he
had

the
right
answer
because
he
had
been
right
so
many
times.”
162

The
fact
that
Draghi’s
plan
of
action
and
direction
were
at
times
hard
to
decipher

quite
possibly
made
him
appear
to
be
more
sovereign
and
omnipotent.

Hindsight

One
tool
in
discovering
the
effectiveness
of
the
communications
of
the
ECB

during
their
first
100
days
yet
to
be
implemented
in
this
discussion
is
that
of

hindsight.
Following
the
colloquialism,
hindsight
is
20/20
and
can
offer
clarity

unavailable
in
the
midst
of
a
circumstance.

From
a
utilitarian
perspective,
analyzing
the
ECB’s
effectiveness
is
simple.
If

the
EU
has
successfully
remained
in
tact
and
the
Euro
a
powerful
currency,
then

Draghi’s
actions
are
retroactively
validated
and
deemed
successful.
As
it
stands,
it

has
been
over
a
year
since
the
first
100
days
of
Draghi
and
contrary
to
the

prediction
of
Eurozone
skeptics,
the
Euro
still
remains
and
the
EU
is
still
intact.

Potential
mistakes
made
during
the
observed
period–Draghi’s
plausible
double

162
Gabriel
Kahn,
Interviewed
by
Phillip
Y.
Domfeh,
December
14,
2012,
Primary

Research
Interview,
transcript.

67

speak,
poor
press
responses
(i.e.
no
comment)
and
bureaucratic
pacing
-‐-‐
were
not

detrimental
or
subject
to
severe
consequences.
In
light
of
such
facts,
it
can
be
fairy

surmised
that,
warts
and
all,
Draghi
successfully
supported
the
ECB’s
chief
mandate

through
his
communications.

68

Act
9

One
Man,
in
his
Time,
Plays
Many
Parts:
A
Conclusion

Following
the
inconclusive
discussion
at
Jean-‐Claude
Trichet’s
farewell
party,

the
group
of
world
influencers
dispersed
in
various
fashions.
Nicholas
Sarkozy

immediately
stormed
out
the
front
door
as
his
aides
ran
to
catch
up
with
him
while

the
more
composed
Angela
Merkel
waited
much
longer
before
quietly
making
her

exit
through
a
side
door.
163

The
crowned
prince,
Mario
Draghi
returned
to
his
seat

and
enjoyed
the
rest
of
the
performance,
letting
the
music
of
Mozart
take
his
mind

away
from
such
troubling
matters.
164

This
would
not
be
the
first
dead-‐end

negotiation
and
the
success
of
his
presidency
would
greatly
rely
on
his
ability
to

weather
such
moments.
The
orchestra
washed
over
him
with
a
sea
of
sounds,
the

dramatic
sonic
tension
foreshadowing
the
nature
of
the
months
to
come.

Following
the
conclusion
of
the
concert,
Draghi
would
end
the
night
as
it
had

begun,
schmoozing
with
politicians
and
dignitaries
alike
as
if
he
himself
were
a

seasoned
politician.

As
he
worked
the
room,
many
did
not
see
Draghi
but
rather,
the

man
whom
they
believed
he
would
be.
As
reported
by
The
New
York
Times,
this

ability
was
one
of
his
greatest
political
skills,
“It
was
vintage
Draghi,
a
performance

so
subtle
and
politic
that
it
seemed
to
please
everyone.
Which,
it
turns
out,
is
the

Draghi
way:
people
often
seem
to
see
what
they
want
to
see
in
him.
“
165

While
some

163

Jack
Ewing
et
al.,
“Europe’s
Leaders
Father
as
Pressure
Mounts
on
Debt,”
New

York
Times,
October
20,
2011,
B3.

164

Jack
Ewing
et
al.,
“Europe’s
Leaders
Father
as
Pressure
Mounts
on
Debt,”
New

York
Times,
October
20,
2011,
B3.

165

Landon
Thomas
Jr.
and
Jack
Ewing,
“Can
Super
Mario
Save
the
Day
for
Europe?”

New
York
Times,
October
29,
2011.

69

saw
a
staunch
defender
of
conservative
banking
ideals,
others
saw
a
man
willing
to

do
whatever
necessary
to
keep
the
Eurozone
solvent.
He
was
a
dark-‐haired

chameleon,
a
man
playing
many
parts.

It
was
in
service
of
this
goal,
the
placation
of
his
many
audiences,
that
the

communications
made
by
the
ECB
during
the
first
100
days
of
Draghi’s
presidency

could
appear
jumbled
or
at
odds
with
each
other.
Conversely,
they
could
also
be

seen
to
have
successfully
allowed
the
ECB
the
space
needed
to
operate

independently,
moving
Europe
towards
desired
ends
and
beginning
the
process
of

saving
the
Euro.
Regardless,
the
incomprehensible
natures
of
his
ways
are
not

impervious
to
hindsight.

Trends
that
were
hidden
through
double
speak
are

elucidated
by
time.

In
September
2012,
Draghi
stated
that
he
would
do
“whatever
it
takes
save

the
euro.”
166

Soon
after,
the
ECB
agreed
to
a
framework
through
which
they
would

purchase
the
bonds
of
ailing
Eurozone
countries.
The
measure
was
supported

unanimously
with
the
exception
of
Jens
Weidmann,
Draghi’s
longstanding
critic
167
.

True
colors
shown,
no
invocation
of
the
Treaty
of
Lisbon,
clever
phrasing
of
non-‐
standard
measures
or
communication
maneuvers
could
paint
him
in
the
light
of
a

conservative
banking
ideologue.
Though
the
statement
is
tried
and
true,
the
old

colloquialism
still
holds
weight:
actions
speak
louder
than
words.
He
finally
took
a

clear
and
decisive
posturing,
alienating
some
stakeholders
and
elating
others.

166

Jamie
Dunkley
“Debt
Crisis:
Mario
Draghi
Pledges
to
do
‘Whatever
it
Takes’
to

Save
Euro,”
The
Telegraph,
July
26,
2012,

http://www.telegraph.co.uk/finance/financialcrisis/9428894/Debt-‐crisis-‐Mario-‐
Draghi-‐pledges-‐to-‐do-‐whatever-‐it-‐takes-‐to-‐save-‐euro.html.

70

And
while
I
truly
do
enjoy
a
good
night
at
the
opera,
the
art
form
is
not

without
its
shortcomings.
Most
notably,
operas
can
be
too
long
and
prone
to

convoluted,
self-‐indulgence
with
overcomplicated
plot
lines.
The
unfolding
drama
of

the
European
Sovereign
Debt
Crisis,
the
European
Central
Bank
and
Mario
Draghi
is

no
exception
to
this
critique.
As
characters
are
recast
and
the
stage
resets,
one
can

only
wonder
how
much
longer
the
drama
of
the
Eurozone
crisis
can
continue
before

it
is
brought
to
a
satisfactory
conclusion.
Though
it
once
held
my
deepest

captivation,
my
more
superfluous
and
whimsical
fascination
with
the
crisis
has
been

whittled
down
to
a
begrudged
awareness
of
globalization
and
its
effect
on
the

modern
world.
As
I,
along
with
the
rest
of
the
planet,
lie
in
wait
for
the
final
act
of

this
grand
opera,
the
exact
hour
when
we
will
be
blessed
with
such
sweet
release
is

simply
a
matter
of
speculation.

71

Appendix
A

Gabriel
Kahn
Interview

Conducted
by
Phillip
Y.
Domfeh
on
December
14,
2012

Did
Draghi
face
a
different
mandate
coming
into
office
than
Jean-‐Claude

Trichet?

Certainly
and
I
think
in
ways
that
made
him
behave
in
a
cautious
manner.
There
was

such
a
change
in
urgency
from
the
Trichet
to
the
Draghi.
Whoever
followed
Trichet

was
going
to
have
to
be
a
much
more
activist
central
banker
than
his
predecessor.

Trichet
presided
over
the
ECB
during
a
period
where
the
institution
acted
in
a
very

conservative
manner
with
one
mandate:
price
stability.
This
is
different
from
the

U.S.
Federal
Reserve
that
has
two
mandates:
central
pricing
and
full
employment.
He

was
put
in
there
with
a
real
political
mandate
that
wasn’t
stated
explicitly
but
was

nevertheless
evident.
He
was
selected
to
get
the
ball
moving
here.

Do
you
think
his
ethnicity
effected
or
influenced
his
nomination?

Well
the
ECB
seemed
in
many
respects
to
be
on
the
leash
from
Germany
so
I
think
it

was
important
to
put
an
Italian
in
there.
Not
someone
from
the
Franco-‐German
or

Dutch
axis
but
someone
from
a
country
that
had
a
more
visceral
understanding
of

what
was
going
on.

You
mentioned
that
Draghi
seemed
cautious
earlier,
can
you
expand
on
that?

It
seems
at
times
that
Draghi
is
dragging
his
feet
when
it
comes
to
making

aggressive
policy.

Well
anybody
in
his
position
has
to
be
really
careful.

You
have
two
big
problems.

Firstly,
you
have
to
take
bold
actions
and
communicate
their
importance
to
your

constituents.
Secondly,
you
can’t
come
across
as
someone
advocating
for
action
that

you
then
don’t
have
the
internal
support
for.
So
he
likely
had
a
lot
of
internal
house

cleaning
to
do
once
he
came
into
office
in
order
to
line
up
the
support
needed
to

move
the
bank
forward.
The
last
thing
you
want
is
for
the
head
of
a
central
bank
to

seem
like
he
is
being
whipped
or
curtailed
by
his
committee.

I
think
this
dynamic
influenced
much
of
the
broader
communication
strategy.
If
the

central
bankers
are
seen
as
being
weak,
lacking
authority
or
not
speaking
with

clarity
then
it’s
game
over.
The
markets
will
turn
against
them.

For
example,
following
the
Dec
1
st

speech,
everyone
thought
he
would
engage
the

ECB
in
direct
bond
buying.

He
appeared
to
message
it,
however,
when
there
was
an

opportunity
to
act
at
the
following
press
conference
he
did
not.
[Draghi’s

constituents]
had
come
to
expect
aggressive
action
from
Draghi
and
the
market

immediately
showed
their
disappointment.
Their
reaction
was
swift
and
severe.

72

The
European
Central
Bank
is
a
governing
entity
that
isn’t
under
the
direct

jurisdiction
of
any
single
country
in
the
Eurozone.
It
seems
like
Draghi
is
often

fighting
to
maintain
this
independence
through
enigmatic
speech.
Is
this

normative?

Alan
Greenspan
was
famous
for
using
mystery
for
his
own
purposes.
People
would

hang
onto
every
word
because
they
could
not
interpret
what
he
was
saying.
He
used

this
as
part
of
his
communications
strategy,
turning
enigmatic
dialogue
into
an
all-‐
knowing
presence.
People
just
assumed
he
had
the
right
answer
because
he
had

been
right
so
many
times.

Bernanke
took
an
opposite
approach
and
tried
to
be
very
explicit,
very
clear
and

leave
nothing
to
chance.
He
ran
the
federal
board
much
more
democratically
by

allowing
everyone
else
to
speak
first.
Previously,
Greenspan
would
speak
first,

putting
anyone
who
might
disagree
with
him
in
an
intellectually
precarious

situation.

You’d
have
to
risk
being
ostracized.
Bernanke
however,
was
trying
to
get

a
broader
amount
of
ideas
out
there.

Regardless,
central
bankers
have
always
been
enigmatic
or
cryptic.
One
of
the

advantages
of
their
press
conferences
is
that
you
don’t
have
to
do
a
Q
and
A.
This

allows
you
more
message
control.

Also,
depending
on
the
group
you
are
speaking

to,
they
are
eating
up
every
word
because
they
are
thinking
they
are
getting
a

glimpse
of
what
you
might
do.
The
press
conference
format
itself
adds
to
the
notion

of
these
“all
powerful,
all
knowing”
central
bankers.

Is
maintaining
this
type
of
relationship
important?

Well
everybody
has
to
think
that
the
central
banker
has
a
“bazooka”
and
can
fire
it.

This
has
been
the
problem
with
Bernanke
and
why
quantitative
easing
has
been

criticized
so
much:
It’s
not
yielding
the
results
that
people
thought
it
was
going
to

and
thus
you
have
to
double
down
on
it
and
do
more
of
it.
It’s
the
law
of
diminishing

returns.
The
more
of
this
aggressive
bond
buying
you
do
the
more
money
you
have

to
spend
to
get
the
same
result.
If
a
patient
is
on
painkillers
and
you
have
to
keep

giving
them
more,
eventually
you
are
going
to
kill
the
patient.

Does
this
mean
you
have
to
sell
it
more
aggressively
to
the
public?

The
problem
is
that
you
can’t
necessarily.
It’s
not
just
a
matter
of
selling
it
harder.

You
are
seeing
in
the
market
place
the
immediate
results
of
your
communication

attempt.
The
market
responds
to
the
money
and
that
is
the
proof;
whatever
kind
of

interest
rates
you
are
able
to
achieve,
unemployment,
whatever.
You
see
it
in
the

stock
market.
People
are
voting
instantaneously
which
makes
it
very
difficult
from
a

messaging
point
of
view.
You
can’t
just
go
out
there
and
promise
certain
things.

73

For
example,
the
Obama
administration
found
itself
in
such
a
position
when

messaging
their
stimulus
bill.

Any
economist
could
have
looked
at
the
situation
and

told
you
that
you
need
a
stimulus
larger
than
$800
billion.
It
needed
to
be
50%

larger,
somewhere
between
$1.3
and
$1.4
trillion.
The
problem
was
that
Congress

was
never
going
to
pass
something
that
large.
$800
billion
was
what
Congress
was

going
to
pass.

After
the
bill
passed
you
have
to
justify
it
to
your
constituents
and

explain
the
positive
impact
it
is
going
to
have,
“We’ve
run
the
numbers
and
here
is

the
big
impact
it’s
going
to
have
on
unemployment.”

So
even
though
you
know
the
medicine
isn’t
as
strong
as
you
need
it
to
be,
you
still

have
to
aggressively
support
it.
When
the
bill
doesn’t
deliver
on
the
promises
you

made
you
have
to
spend
the
next
four
years
explaining
and
listening
to
people
say,

“Well
you
said
it
was
going
to
do
this
and
it
didn’t.”
This
is
evident
in
how
the

economy
dominated
Obama’s
reelection
campaign.

So
when
you
ask
if
Draghi
needs
to
message
his
actions
harder,
the
truth
is
you
don’t

want
to
be
in
that
position
at
all.
Instead,
you
want
to
create
the
impression
of
unity:

that
everyone
is
behind
you.
Draghi
has
had
a
lot
of
problems
with
that.
People
have

spoken
out
against
it
and
resigned.

You
also
want
to
create
the
notion
of
clarity
and
decisiveness.
Draghi
really
has
to

stake
out
a
new
activist
roll
for
the
ECB
and
clearly
communicate
a
position
that
the

institution
has
previously
never
had.

Do
you
think
Draghi’s
advocacy
for
fiscal
unity
has
been
effective?

Having
studied
European
politics,
it
is
so
difficult
trying
to
predict
this
type
of
thing.

I
think
his
consistent
and
vocal
approach
has
moved
the
political
class
closer
to

making
certain
decisions
however,
they’re
so
dysfunctional
and
numerous
that
it

seems
like
a
daunting
undertaking.
It’s
one
thing
to
get
everyone
to
agree
to

different
highway
rules.
Having
everyone
together
on
common
fiscal
principles

would
change
the
game
and
is
much
harder.

In
your
point
of
view,
how
does
the
geopolitical
make
up
of
the
Eurozone

influence
communications
and
decision-‐making?

Well
Merkel’s
Germany
was
a
strong
force
against
the
bigger
and
bolder
actions
of

bond
buying
or
the
creation
of
a
common
Eurobond
–an
act
that
would
illustrate

unity
[in
the
Eurozone]
and
potentially
have
positive
consequences
in
the
[financial]

market.

Her
stances
were
in
response
to
domestic
politics.
There
was
a
feeling

amongst
German
voters
that
they
are
paying
for
the
indiscretions
of
their
southern

neighbors.

74

Do
you
think
the
ECB
should
focus
more
communication
efforts
towards

everyday
European
citizens?

For
the
sake
of
argument,
let’s
focus
on

Germany.

Well
dealing
with
common
voters
could
prove
to
be
more
consequential,
in
certain

cases,
than
dealing
with
the
heads
of
state.
However,
this
isn’t
really
a
central

banker’s
forte
and
would
likely
put
them
in
a
precarious
situation.

So
the
responsibility
falls
back
on
Merkel
to
bring
everyday
citizens
on
board

with
bold
actions
that
could
save
the
Euro?

Right
but
don’t
forget
there
are
like
big,
Murdock-‐style
tabloids
and
papers
in
these

areas
that
stir
people
up
and
influence
their
political
leanings.
There’s
a
lot
of

economic
populism
in
Europe.
She
is
fighting
against
a
lot
and
some
of
these
forces

directly
impact
her
political
survival.
Nevertheless,
I
think
a
lot
of
the
blame
here

falls
on
Merkel
for
not
taking
a
bolder
stance,
proposing
anything
substantial,
and

being
tepid
in
her
endorsements
or
solutions.

In
most
of
Draghi’s
speeches,
he
addresses
the
financial
crisis
in
broad
terms.

Would
it
be
more
effective
if
Draghi
spoke
in
more
specifically
or
used
case

scenarios?

Well
remember
how
complicated
this
is,
the
executive
board
members
generally
are

appointed
by
the
heads
of
governments
of
different
Eurozone
countries.
They
serve

at
the
behest
of
these
leaders.
If
they
don’t
do
their
bidding,
they
are
out.
It’s
quite

like
-‐-‐
each
banker
has
his
own
issues
of
credibility
and
set
of
things
he
is
advocating

for.

You
also
have
a
board
that
represents
the
economic
imperative
of
different

countries.
These
countries
are
all
different,
southern
Europe
needed
lower
interest

rates,
and
northern
Europe
needed
higher
interest
rates,
etc.
So
the
ECB
president

can’t
just
go
out
and
“rally
the
troops”
and
get
each
board
member
to
disseminate

his
message
like
the
Speaker
of
the
House
can.
It’s
a
matter
of
repetition
and

amplification.
It’s
much
more
difficult.

I
don’t
see
any
feasible
way
for
the
president
of
the
ECB
to
create
a
huge,
broader,

dumbing
down
if
you
will
of
nuanced
economic
policy
either.

75

Appendix
B

Text
Analysis

January
28,
2013

November
3
rd
,
2011

Introductory
Statement
to
the
Press
Conference
(with
Q&A)

Observations:

• Draghi
maintained
same
order
of
dissemination
as
the
former
President.

Information
was
relayed
in
following
order:
ECB
Interest
Rates,
Economic

Analysis,
Monetary
Analysis,
Fiscal
Policies,
and
Structural
Reforms
ending

with
Q&A.

• Always
refers
to
decisions
made
by
the
ECB
as
being
the
view
of
the

Governing
Council
instead
of
solely
his
own.
Likely
an
attempt
to
show
unity

•
“Downside
risk”
of
the
economy
referenced
four
times

• Explains
that
growth
in
the
second
half
of
the
year
will
be
slow
three
times

with
the
exact
same
phrasing

• Uses
“cross-‐check”
section
to
reiterate/confirm
points
made
during
first
four

sections
before
moving
to
advocacy

• When
asked
specifically
about
the
end
of
a
non-‐standard
practice
called
the

SMP
and
if
he
could
envision
a
time
when
it
was
no
longer
needed,
Draghi

outlined
the
nature
of
the
SMP
instead
and
its
justification.
This
did
not

answer
the
question
directly.

• No
weak
Eurozone
countries
were
referenced
specifically
by
name
during
his

opening
remarks

• When
asked
specifically
about
Greece
and
about
his
concern
regarding
the

outcome
of
the
Euro
Summit,
he
pivoted
from
minute
speculation
to
a

laundry
list
of
tactics

• When
asked
about
the
possible
inefficiency
of
ECB
attempts
to
help
Italy
i.e.

bond
purchasing
and
the
fact
that
yields
on
bonds
had
grown,
he
put
things

back
on
local
economic
policies,
“No,
we
have
not
really
been
focusing
on
this

and
similar
situations
in
our
discussions
today
and
yesterday.
However,
it
is

clear
that
–
as
I
have
said
many
times
–
the
responsibility
for
maintaining

financial
stability
and
orderly
financial
conditions
lies
first
and
foremost
with

national
economic
policies.
It
is
really
pointless
to
think
that
sovereign
bond

rates
could
be
stably
brought
down
for
a
protracted
period
of
time
by

external
interventions.”

• Asked
directly
about
becoming
lender
of
last
resort:
Draghi
used
the
treaty
as

a
defense,
“I
have
a
question
for
you:
what
makes
you
think
that
the
ECB

becoming
the
lender
of
last
resort
for
governments
is
what
is
needed
to
keep

the
euro
area
together?
No,
I
do
not
think
that
this
is
really
within
the
remit

of
the
ECB.
The
remit
of
the
ECB
is
maintaining
price
stability
over
the

medium
term.”

76

• Draghi’s
response
to
allegations
that
he
was
not
a
banker
who
held
to
the

German
tradition
validated
the
ideals
while
maintaining
distance,
“As
for
the

future,
let
me
do
my
work
and
we
will
have
periodic
checks
as
to
whether
I

am
in
sync
with
this
tradition
or
deviating
from
it.”

Key
Moments/Statements:

• “I
am
delighted
to
proceed
now
with
our
well-‐established
practice
of
real-‐
time
communication…”

• Announced
key
ECB
Interest
Rate
cut
reduction
by
25
points.

• “All
euro
area
governments
need
to
show
their
inflexible
determination
to

fully
honor
their
own
individual
sovereign
signature
as
a
key
element
in

ensuring
financial
stability
in
the
euro
area
as
a
whole.
The
Governing

Council
takes
note
of
the
fiscal
commitments
expressed
in
the
Euro
Summit

statement
of
26
October
2011
and
urges
all
governments
to
implement
fully

and
as
quickly
as
possible
the
measures
necessary
to
achieve
fiscal

consolidation
and
sustainable
pension
systems,
as
well
as
to
improve

governance.
The
governments
of
countries
under
joint
EU-‐IMF
adjustment

programs
and
those
of
countries
that
are
particularly
vulnerable
should

stand
ready
to
take
any
additional
measures
that
become
necessary.”

• “It
is
crucial
that
fiscal
consolidation
and
structural
reforms
go
hand
in
hand

to
strengthen
confidence,
growth
prospects
and
job
creation.
The
Governing

Council
therefore
calls
upon
all
euro
area
governments
to
accelerate,

urgently,
the
implementation
of
substantial
and
comprehensive
structural

reforms.”

• “Eurozone
members
should
enact
labor
reforms.
Privatize
certain
services

provided
by
public
sector,
reforms
that
increase
competition
in
product

markets,
adopt
and
ratify
measures
announced
at
Euro
Summit”

Summary:

• Draghi
used
the
same
format
and
language
of
Trichet
making
his
first
press

conference
run
very
smoothly.
Repetition
was
one
of
the
key
tactics
used
to

get
information
across
to
the
press.
For
the
most
part,
Draghi
refused
to
offer

any
speculation
on
the
EU
past
the
ECB’s
realm
of
influence
and
jurisdiction.

Q
&
A
Topic
Tracker:

• Greece:
6

• Italy:
5

• Interest
Rate
Cut:
4

• Eurozone
Break
Up:
2

• Lender
of
Last
Resort/Quantitative
Easing:
2

• SMP:
4

• China:
2

• Bundesbank:
1

• German
Business:
1

77

November
18,
2011

Introductory
Remarks
at
Frankfurt
European
Banking
Congress
“The
Big
Shift”:

Continuity,
Consistency
and
Credibility

Observations:

• Frankfurt
Congress
a
perfect
strategic
placement
for
Draghi’s
first
speaking

engagement
because
of
its
focus
on
the
future
of
economic
integration

• The
ideas
and
principles
in
his
speech
were
laid
out
in
a
very
clear
and

concise
manner.
The
simplification
of
the
ECB’s
monetary
policy
into
three
C

words
made
it
far
more
digestible.

• Draghi
mentions
LTROs
for
the
first
time
as
President.
Possible
hint

regarding
the
December
press
conference.

• It
is
interesting
that
interest
rate
cuts
are
linked
directly
to
the
main
function

of
the
ECB
and
never
framed
as
‘non-‐standard
measures”
when
they
are

clearly
another
action
induced
by
the
crisis.

• Same
language
used
here
for
credibility
that
is
usually
associated
with
fiscal

and
monetary
policy
at
the
end
of
his
press
conference
remarks,
“Credibility

implies
that
our
monetary
policy
is
successful
in
anchoring
inflation

expectations
over
the
medium
and
longer
term.
This
is
the
major

contribution
we
can
make
in
support
of
sustainable
growth,
employment

creation
and
financial
stability.
And
we
are
making
this
contribution
in
full

independence.”

Key
Moments/Statements:

• Draghi
takes
Eurozone
Leaders
to
task
for
not
acting
decisively
enough,
“But

in
the
euro
area
there
is
a
third
essential
element
for
financial
stability
and

that
must
be
rooted
in
a
much
more
robust
economic
governance
of
the

union
going
forward.
In
the
first
place
now,
it
implies
the
urgent

implementation
of
the
European
Council
and
Summit
decisions.
We
are
more

than
one
and
a
half
years
after
the
summit
that
launched
the
EFSF
as
part
of
a

financial
support
package
amounting
to
750
billion
euros
or
one
trillion

dollars;
we
are
four
months
after
the
summit
that
decided
to
make
the
full

EFSF
guarantee
volume
available;
and
we
are
four
weeks
after
the
summit

that
agreed
on
leveraging
of
the
resources
by
a
factor
of
up
to
four
or
five
and

that
declared
the
EFSF
would
be
fully
operational
and
that
all
its
tools
will
be

used
in
an
effective
way
to
ensure
financial
stability
in
the
euro
area.
Where

is
the
implementation
of
these
long-‐standing
decisions?”

Summary

• Defended
rate
cuts
as
necessary
for
price
stability

• Used
aggressive
language
when
addressing
the
actions
of
Eurozone
leaders.

This
was
probably
targeted
at
the
creating
stronger
support
amongst
the

investor
community
who
had
been
waiting
on
leaders
to
act

78

December
1,
2011

Hearing
Before
the
Plenary
of
the
European
Parliament
on
the
Occasion
of
the

Adoption
of
the
Resolution
of
the
ECB’s
2010
Annual
Report:
Introductory
Statement

Observations:

• Introduction
to
speech
spans
four
different
languages.
He
starts
in
English

greeting
everyone,
moves
to
French
when
speaking
about
Trichet,
moves
to

German
and
ends
in
his
native
language.

• Draghi
again
defended
the
ECB
interest
rate
cut.

• Instead
of
scolding
EU
leaders
as
he
did
in
Frankfurt,
Draghi
affirms
the

actions
they
have
taken
to
fight
the
crisis
and
adopts
sympathetic
language

• States
that
his
speech
should
not
be
taken
as
policy
foreshadowing
early
on.

Could
possibly
be
premeditated
fire
insurance,
“As
the
ECB’s
Governing

Council
meets
on
Thursday
next
week,
we
are
now
in
the
pre-‐decision

period,
and
nothing
that
I
say
should
in
any
way
be
interpreted
in
terms
of

future
monetary
policy
decisions.
But
as
far
as
the
current
situation
is

concerned,
there
is
not
much
more
to
say
beyond
what
I
have
said
in
recent

statements.”

Key
Moments/Statements:

• Non-‐standard
measures
framed
in
service
of
price
stability
instead
of
being

more
crises
related
“As
you
know,
the
ECB’s
monetary
policy
is
constantly

guided
by
the
goal
of
maintaining
price
stability
in
the
euro
area
over
the

medium
term.
And
when
I
say
this,
I
mean
price
stability
in
either
direction.

This
applies
to
both
the
setting
of
official
interest
rates
and
the

implementation
of
non-‐standard
measures.”

• The
importance
of
non-‐standard
measures
explained
at
greater
length.
One

monetary
policy
is
not
enough
to
enact
change
in
the
Eurozone
because
of

the
different
policies
at
work
in
each
country,
“Dysfunctional
government

bond
markets
in
several
euro
area
countries
hamper
the
single
monetary

policy
because
the
way
this
policy
is
transmitted
to
the
real
economy

depends
also
on
the
conditions
of
the
bond
markets
in
the
various
countries.

An
impaired
transmission
mechanism
for
monetary
policy
has
a
damaging

impact
on
the
availability
and
price
of
credit
to
firms
and
households.
This
is

the
very
important
monetary
policy
reason
for
the
ECB’s
non-‐standard

measures.
But
of
course,
such
interventions
can
only
be
limited.

Governments
must
–
individually
and
collectively
–
restore
their
credibility

vis-‐à-‐vis
financial
markets.
“

• “A
new
compact
is
the
most
important
things
to
do
in
regards
to
restoring

credibility
to
the
Eurozone”

• The
four
words
“other
elements
might
follow”
are
highly
speculated
over

after
the
press
conference,
many
believing
they
are
a
reference
to

quantitative
easing.

79

Summary:

• The
main
purpose
for
this
speech
despite
being
a
hearing
was
the
request
of

a
“new
fiscal
compact.”
The
phrase
“other
elements
might
follow”
likely
a

dangling
carrot
used
to
motivate
leaders

80

December
8,
2011

Introductory
Statement
to
the
Press
Conference
(with
Q&A)

Observations:

• LTROs
are
extended
to
three
years

• Draghi
announces
another
rate
cut,
bringing
the
ECB
interest
rate
down
to

1%.
The
decision
to
cut
the
interest
rate
in
December
was
not
unanimous

• No
press
release
issued
following
European
Parliament
speech
to
clarify

phrase
“more
actions
will
follow,”
allowing
speculation
to
build.

• The
structural
reforms
section
of
his
opening
remarks
was
less
dense
than
in

November.

• Cross-‐check
section
much
shorter
than
November

Key
Moments/Statements:

• Draghi
announces
new
non-‐standard
measures
“following
the
coordinated

central
bank
action
on
November
30
th

and
to
provide
liquidity
to
the
global

financial
system,
the
governing
council
today
decided
to
adopt
further
non-‐
standard
measures.
These
measures
should
ensure
enhance
access
of
the

banking
sector
to
liquidity
and
facilitate
the
functioning
of
the
euro
area

market.”

• “Downside
risks
notably
relate
to
a
further
intensification
of
the
tensions
in

euro
area
financial
markets
and
their
potential
spillover
to
the
euro
area
real

economy.”

• In
regards
to
new
fiscal
compact:
“Let
me
start
by
saying
that
this
fiscal

consolidation
is
unavoidable,
because
the
situation
we
are
observing
would

otherwise
be
unsustainable.”

• Evokes
the
Bundesbank
in
defense
of
the
ECB
not
being
a
lender
of
last

resort,
“That
is
why,
in
a
sense,
this
Treaty
embodies
the
best
tradition
of
the

Deutsche
Bundesbank,
whereby
monetary
financing
has
always
been

prohibited.”

• Draghi
was
more
emphatic
during
his
fiscal
policies
section
in
December

than
in
the
previous
month
“Turning
to
fiscal
policies,
all
euro
area

governments
urgently
need
to
do
their
utmost
to
support
fiscal
sustainability

in
the
euro
area
as
a
whole.
A
new
fiscal
compact,
comprising
a
fundamental

restatement
of
the
fiscal
rules
together
with
the
fiscal
commitments
that
euro

area
governments
have
made,
is
the
most
important
precondition
for

restoring
the
normal
functioning
of
financial
markets.
Policy-‐makers
need
to

correct
excessive
deficits
and
move
to
balanced
budgets
in
the
coming
years

by
specifying
and
implementing
the
necessary
adjustment
measures.
This

will
support
public
confidence
in
the
soundness
of
policy
actions
and
thus

strengthen
overall
economic
sentiment.”

81

Summary:

• Following
the
Speech
giving
at
the
European
Parliament,
the
press
was
ready

for
some
sort
of
announcement
regarding
quantitative
easing.
Instead,
they

were
met
with
a
number
of
non-‐standard
measures.
Though
in
fact
they

represented
beefed
up
response
from
the
ECB
regarding
the
debt
crisis,
they

did
not
meet
expectations,
thus
causing
disappointment.

• His
calling
to
action
was
more
simplified
this
time
unlike
the
first
press

conference.
Along
with
other
sections
like
the
“cross
check,”
the
December

remarks
were
tighter
and
more
poignant.

Q
&
A
Topic
Tracker:

• Governing
Council:
3

• Quantitative
Easing:
9

• Italy:
2

• Germany:
1

• Rate
Cut:
2

• Break
Up:
2

• SMP:
1

• EFSF:
2

• Bonds:
1

• Austerity:
1

82

December
14
th
,
2011

Interview
with
the
Financial
Times

Observations:

• Draghi
eagerly
crammed
in
a
long
list
of
ECB’s
crisis
responses
during
his

first
answer.
The
rote
nature
of
the
response
seemed
as
if
he
was

regurgitating
a
message
given
him
during
media
training

• When
responding
to
a
question
about
quantitative
easing,
Draghi
used
the

primacy
of
credibility
in
the
Eurozone
instead
of
his
standard
retreat
behind

the
Treaty
of
Lisbon,
“The
important
thing
is
to
restore
the
trust
of
the
people

–
citizens
as
well
as
investors
–
in
our
continent.
We
won’t
achieve
that
by

destroying
the
credibility
of
the
ECB.
This
is
really,
in
a
sense,
the
undertone

of
all
our
conversation
today.”

• Draghi
cryptically
responded
when
asked
about
the
longevity
of
the

controversial
SMP,
“We
have
not
discussed
a
precise
scenario
for
the
SMP.
As

I
often
said,
the
SMP
is
neither
eternal
nor
infinite.”

Key
Moments/Statements:

• Regarding
lessons
learned,
“I
think
we
learnt
the
lessons
that
we
need
a
more

resilient
financial
system,
a
system
where
we
would
have
less
debt
and
more

capital.
There
has
been
substantial
progress
in
designing
new
regulatory

policies
and
some
progress
in
implementing
this
new
design.”

• Regarding
PSI,
“The
ideal
sequencing
would
have
been
to
first
have
a
firewall

in
place,
then
do
the
recapitalization
of
the
banks,
and
only
afterwards
decide

whether
you
need
to
have
PSI.
…And
so
PSI
was
a
political
answer
given
with

a
view
to
regaining
the
trust
of
these
countries’
citizens.”

• Regarding
breaking
up
the
Eurozone,
“But
as
I
said
before,
this
wouldn’t
help.

Leaving
the
euro
area,
devaluing
your
currency,
you
create
a
big
inflation,

and
at
the
end
of
that
road,
the
country
would
have
to
undertake
the
same

reforms
that
were
due
to
begin
with,
but
in
a
much
weaker
position.”

Summary:

• The
Financial
Times
interview
allowed
Draghi
to
explain
many
of
the
ideas,

concepts
and
measures
help
and
implanted
by
the
ECB
in
more
detail
than
in

the
monthly
press
conference.
Strong
justifications
and
defenses
were
given

for
the
LTROs,
Greek
austerity,
and
the
new
fiscal
compact.

83

December
15
th
,
2011

Ludwig
Erhard
Lecture
Series:
The
euro,
monetary
policy
and
the
design
of
the
fiscal

compact

Observations:

• Opened
speech
by
paying
deep
respects
to
Ludwig
Erhard
for
his
work
in

establishing
the
independence
of
the
German
central
bank,
this
was
along

with
the
speaking
engagement
itself
was
a
strong
move
towards
his
more

conservative
audience.

• Referred
to
the
LTROs
as
“a
novelty
in
ECB
monetary
policy
operations.”
This

is
strange
choice
of
words
considering
how
strongly
he
has
defended
it
in

previous
speeches.

Likely
pandering
to
a
more
conservative
audience.

• As
with
other
engagements,
Draghi
defended
his
recent
actions
and
the

implantation
of
the
non-‐standard
measures,
highlighting
their
finite
nature.

Key
moments/Statements:

• “Yet
the
implementation
of
the
Stability
and
Growth
Pact
has
not
been
good

enough.
As
the
Federal
Chancellor
of
Germany
recently
remarked,
the
Pact

has
been
broken
60
times
over
the
past
12
years.
So
we
clearly
have
work
to

do
to
prevent
this
happening
again.”

• “The
new
set
of
rules
for
economic
and
fiscal
surveillance
known
as
the
six-‐
pack
–
which
was
approved
by
the
European
Parliament
earlier
this
year
–

will
certainly
strengthen
the
implementation
of
the
rules.
But
while
these

changes
were
being
planned,
the
entire
fiscal
cohesion
and
credibility
of
the

euro
area
was
weakened.”

•
“Let
me
conclude.
The
decisions
of
the
European
Council
summit,
together

with
the
six-‐pack
approved
recently
by
the
European
Parliament,
are
a

breakthrough
for
clear
fiscal
rules
in
our
monetary
union.”

• Identified
Greece’s
debt
problem
as
a
“unique
case”

Summary:

• Used
this
speech
to
outline
the
new
fiscal
compact
in
greater
detail

• This
speech
does
a
great
job
of
aligning
the
ECB
with
the
conservative

tradition.
Invited
to
speak
by
Hans
Tietmeyer,
he
seems
to
be
his
key

reference
for
credibility.

84

December
19
th
,
2011

Hearing
at
the
Committee
on
Economic
and
Monetary
Affairs
of
the
European

Parliament:
Introductory
Statement

Observations:

• The
speech
held
little
to
no
new
information.
The
only
interesting
thing
was

ECB’s
support
of
the
ESFSF,
“As
regards
the
EFSF,
the
Governing
Council
of

the
ECB
has
decided
that
the
ECB
will
be
able
to
act
as
agent
for
the
EFSF
in

its
market
operations.
The
ECB
–
probably
supported
by
a
number
of

National
Central
Banks
–
will
make
its
technical
infrastructure
and
know-‐
how
available
to
the
EFSF.
The
technical
and
legal
preparations
have
started

and
we
hope
to
complete
them
in
January.”

Key
Moments/Statements:

• “Since
the
last
regular
hearing
in
October
with
former
President
Trichet,
the

ECB
has
taken
a
number
of
steps
to
ensure
that
it
will
continue
to
deliver

price
stability
in
the
medium
term
in
an
environment
that
remains

challenging.
These
steps
relate
both
to
changes
in
our
interest
rates
and
to

non-‐standard
measures.
“

• “This
Council
has
really
brought
about
a
breakthrough
in
terms
of

commitment
to
sound
and
transparent
fiscal
rules.
The
foundations
for
a

fiscal
compact
have
been
laid
–
a
suggestion
presented
before
the
plenary
of

the
European
Parliament
at
the
ECB
hearing
on
our
annual
report
at
the

beginning
of
this
month.”

• “The
new
fiscal
compact
is
an
essential
signal,
showing
a
clear
trajectory
for

the
future
evolution
of
the
euro
area.
It
frames
expectations
of
both
citizens

and
financial
markets.
Enshrining
strict
rules
in
primary
legislation,
making

them
enforceable
by
the
European
Court
of
Justice:
all
of
this
should

contribute
to
making
public
finances
in
the
euro
area
credibly
robust.
The

ECB
welcomes
this
outcome.”

Summary:

• Nothing
new
happened
during
this
speech.
Following
the
turbulence
of
his

first
visit,
he
likely
attempted
to
not
rock
markets
with
his
remarks.

85

January
12,
2012

Introductory
statement
to
the
press
conference
(with
Q&A)

Observations:

• New
language
was
used
during
the
fiscal
policies
section
of
his
opening

remarks;
“Slippages
in
the
implementation
of
fiscal
consolidation
plans
of

vulnerable
countries
must
be
corrected
swiftly
by
structural
fiscal

improvements.
With
regard
to
the
new
provisions
of
the
EU
economic

governance
framework
that
recently
came
into
force,
it
is
crucial
that
all
the

elements
be
implemented
rigorously.
Only
ambitious
policies
to
prevent
and

correct
macroeconomic
and
fiscal
imbalances
will
foster
public
confidence

in
the
soundness
of
policy
actions,
and
thus
strengthen
overall
economic

sentiment.”

• Draghi
directly
used
the
phrase
“no
comment”
five
times
during
Q
and
A

section.

• This
was
the
first
of
his
press
conferences
were
he
did
not
reference
the

Treaty
of
Lisbon
or
Article
123.

• Draghi
didn’t
use
the
word
“substantial”
when
referring
to
the
downside

risks
of
the
economy.

Key
moments/Statements:

• Positive
report
on
the
LTROs,
“The
provision
of
liquidity
and
the
allotment

modes
for
refinancing
operations
will
continue
to
support
euro
area
banks,

and
thus
the
financing
of
the
real
economy.
The
extensive
recourse
to
the

first
three-‐year
refinancing
operation
indicates
that
our
non-‐standard
policy

measures
are
providing
a
substantial
contribution
to
improving
the
funding

situation
of
banks,
thereby
supporting
financing
conditions
and
confidence.

In
addition,
we
are
actively
working
towards
the
implementation
of
all
the

measures
announced
at
our
December
meeting,
which
should
provide

additional
support
to
the
economy.
As
stated
on
previous
occasions,
all
the

non-‐standard
monetary
policy
measures
are
temporary
in
nature.”

• Regarding
the
new
fiscal
compact
and
implantation
of
the
EFSF,
“The

Governing
Council
welcomes
the
European
Council’s
agreement
to
move
to
a

stronger
economic
union,
which
was
announced
on
9
December
2011.
The

new
fiscal
compact,
comprising
a
fundamental
restatement
of
the
fiscal
rules

together
with
the
fiscal
commitments
that
euro
area
governments
have

made,
is
an
important
contribution
to
ensuring
the
long-‐run
sustainability
of

public
finances
in
the
euro
area
countries.
The
wording
of
the
rules
needs
to

be
unambiguous
and
effective.
The
further
development
of
the
European

financial
stability
tools
should
make
the
operation
of
the
European
Financial

Stability
Facility
and
the
European
Stability
Mechanism
more
effective.
The

swift
deployment
of
these
tools
is
now
urgently
needed.
Concerning
the

involvement
of
the
private
sector
in
financial
assistance
for
indebted

countries,
we
welcome
the
reaffirmation
that
the
decisions
taken
on
21
July

86

and
26
and
27
October
2011
concerning
Greek
debt
are
unique
and

exceptional.”

Summary:

• Draghi’s
tone
during
the
press
conference
could
be
inferred
to
be
positive

following
the
minimizing
of
downside
risk
and
the
effect
of
the
LTROs.

Q
&
A
Topic
Tracker:

• Governing
Council:
1

• Exchange
Rate:
1

• Quantitative
Easing:
2

• LTRO:
3

• Italy:
3

• EFSF:
1

• Interest
Rates:
2

• Greece:
5

• Spain:
2

• PSI:
5

• Ireland:
1

• Austerity:
1

• German
Opinion:
1

87

February
9
th
,
2012

Introductory
statement
to
the
press
conference
(with
Q&A)

Observations:

• Downside
risk
not
referred
to
as
substantial

• ECB
maintains
interest
rate

• LTROs
still
effective

• The
fiscal
policies/structural
reform
section
consolidated
into
one
section

Key
moments/Statements:

• Draghi
states
that
he
has
spoken
with
the
Greek
Prime
Minister
and
the

parliament
has
agreed
to
a
deal

• Cryptically
says
that
giving
money
to
a
facility
which
would
then
give
said

funds
to
a
weak
Eurozone
country
would
not
be
quantitative
easing

Summary:

• Draghi
was
cautious
in
regards
to
the
tentative
Greek
Austerity
deal,
keeping

most
of
his
cards

Q
&
A
Topic
Tracker:

• Greece:
6

• LTRO:
5

• Italy:
2

• Downside
Risk:
1

• Treaty:
1

• SMP:
3

• Spain:
1

• Governing
Council:
2

• Fiscal
Compact:
1

• EFSF:
4

• Trichet:
2

88

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Abstract (if available)

Abstract This paper examines the complexities of technocratic communications in the modern age of widespread economic crisis and globalization. More specifically, it provides a case study of the communications made by the European Central Bank during the first 100 days of Mario Draghi’s leadership of the institution. It chronicles the turbulent political and economic climate of the Eurozone during the aforementioned period while also attempting to illuminate the European Central Bank’s complex communication strategy. To increase the palatability of such trying subject matter, the events of Draghi’s first 100 days are retold in the light of an opera-- an art form as rich and complex as Europe’s current financial predicament. The key element is an in depth critical analysis of Draghi’s actions during his first three months as president. It is properly surmised that though his actions appear to be inscrutable at times, his tactics consistently supported the primary functions of the European Central Bank: maintaining price stability and retaining the structural solidity of the Eurozone.

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