"Mario Draghi's speech at Jackson Hole on August 22nd caused a considerable stir. For the first
time, he admitted that the absence of a central bank backstop for government
borrowing means both higher borrowing costs for governments and a greater
likelihood of market punishment for profligate governments (...)."
"And the consequences of
this shocking waste of human capital could be serious. Highly-indebted
governments in the Eurozone depend on high tax revenues in the future to reduce
their debt burdens: while even less heavily indebted governments such as
Germany will also need high tax revenues in the future to support their increasing
proportion of elderly. The future fiscal sustainability of the Eurozone depends
on the young people whose futures are currently being systematically destroyed
by unemployment. THIS is what Draghi's speech is about."
