In something of a contrarian view of the results of last Thursday's meeting of the European Central Bank, Merk Funds President Axel Merk said ECB President Mario Draghi took tail risks out of the eurozone, while at the same time forcing closer fiscal integration, actions that Merk calls "pure genius."
"Investors have not woken up to it, but last week may have been a game changer," Merk (left) writes in his latest commentary. "He did it all while keeping the ECB out of some political minefields. It's pure genius. The initial market reaction suggested he might have lost a battle, not realizing that he is winning the war."
In essence, Merk adds, Draghi told the world that the ECB will act like a central bank of a United States of Europe if the integration of European fiscal policy accelerates.
"Draghi also correctly shifts the focus going forward on the increased 'fragmentation' in the eurozone where market participants increasingly focus on domestic rather than intra-European activities," he wrote.
The ECB's decision to do little to help stimulate Europe's ailing economy was criticized by many professional money managers. They read Draghi's recent comments on the eurozone as a sign the ECB would step in, and were disappointed in what they say were "overpromises" by the central bank's president.
