A virtuous circle or cycle in Europe? Hah!

Sir, you hold that “Mr Draghi may not have to go down the QE road. There is growing sentiment in financial markets that the ECB chief’s credibility has already created the virtuous circle Europe needs to emerge from the crisis. Lower bond yields are improving credit conditions across the eurozone”, “Draghi must tackle threat of deflation”, May 10.

And Ralph Atkins also refers to the same “virtuous cycle” in “Draghi’s bluff closer to being called”.

What can I say? As I see it the risk weighted capital requirements for banks which favors immensely bank lending to the “infallible sovereigns” over any lending to “the risky” medium and small businesses, entrepreneurs and start-ups, has placed Europe in a vicious circle, or cycle, in a real death-spiral.

And Mario Draghi, as a former chairman of the Financial Stability Board, bears much responsibility for that.

Why on earth should there be any Quantitative Easing in Europe if the liquidity provided cannot flow freely to where it is most needed?