Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In his memoirs, Bernanke commented: “Like Mario Draghi, we were declaring we would do whatever it takes.”63 But this was far too kind to the Europeans. Draghi’s OMT as it emerged by September 2012 was a conditional confidence-building measure. It worked by calming markets and stopping the panic. But beyond that it provided no stimulus to the eurozone economy. In truth, the ECB’s possibilities were limited. QE for Europe with Germany’s conservatives on the warpath was unthinkable.64 As the eurozone economy stagnated and its banks deleveraged, the LTRO facilities were progressively paid back. Unlike the Fed, whose balance sheet Bernanke was actively expanding, the ECB’s balance sheet contracted back to where it had been in the crisis-ridden fall of 2011. Europe was sliding ever deeper into its second recession.

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