Axel Weber and Mario Draghi in pole positions as fight for ECB succession starts The campaign wasn't supposed to start until next year. But the race for the job of next president of the European Central Bank has already begun in earnest, complete with PR campaigns, political manoeuvring and sometimes dubious innuendoes.  

By Pierre Briancon
Published: 6:00AM GMT 03 Feb 2010

The two candidates to replace Jean-Claude Trichet are Axel Weber, the Bundesbank president, and Mario Draghi, the Bank of Italia governor. Although Trichet's mandate expires in October, 2011, Europe's leaders will later this month choose a new vice-president for the ECB, to replace Lucas Papademos. That decision over the vice-president will largely determine who becomes president.

The ECB is a finely tuned machine where geographical influences have to be delicately balanced. If Portugal's Vitor Constancio becomes the ECB's number two, Weber will be in pole position for the top job. But should Luxembourg's Yves Mersch make it, then Draghi probably has a lock on the nomination.

Despite Francesco Giavazzi's wise words, the speculation over the next ECB president keeps getting hotter.

WSJ economics blog points to a Bloomberg survey which polls 27 econs on their prediction. 25 vote for Axel Weber, Bundesbank President.

WSJ has a nice profile of Weber as well

In turn, Mr Constâncio's appointment - still subject to formal approval by eurozone leaders - will affect the "balance of power" considerations when Mr Trichet's successor is chosen.

Although the ECB is still young, a convention has arisen whereby its top posts are split between small and large countries, southern and northern Europeans, and, to a lesser extent, between "hawks" and "doves".

Regarded as a "dove" in ECB terms, less likely to worry about inflation when growth is weak, and from a southern European country, Mr Constâncio's selection appears to have strengthened the hand of a northern conservative for the top job - that is, Germany's Mr Weber.

Now that ECB President and monetarist pussycat Jean-Claude Trichet has Thrown the ECB Rulebook Out the Window, battle lines have formed in regards to defending the Euro.

Please consider Weber Draws Battle Lines as Pressure Mounts on ECB

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Trichet is also battling Merkel's Coalition Call for `Orderly' Defaults

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For more details, please see Merkel's Coalition Calls for EU `Orderly' Defaults; Spain Prime Minister says Speculation of a Bailout for Spain is "Complete Madness"

It seems that Bundesbank President Axel Weber and German Chancellor Angela Merkel have figured out a little something that escapes the mind of ECB President Jean-Claude Trichet: Defending the Euro from defaults by Greece, Portugal, and Spain may be extremely expensive, perhaps impossible.

Soon it will be time for the crude reality, either austerity plunges Europe into another recession and debt piles up and the solvency of Germany is at stake or the program works as the gurus expected and an slow recovery slugs trhrough without inflation.

In the latter case, Greece is still insolvent becuase rich people do not pay taxes there...in the former all Europe is insolvent in four further years of recession.

So, either Greece defaults or inflation is created.

Or Spain and Italy stops deflating their economy or Germany recovery is halted...

I hope they will not have any ther option than monetize debt, generate inflation, increase german salaries and put a high tax on the casino... A mass transfer of wealth from teh casino and banking system to the German worker and Portugal and Greece or everything collpases.

Of course, bankers cold be right and you can growth at 0.1 % every semester for ten years with high unemployment and low inflation despite deficit spending cut which translate in lower aggregate demand.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude