This morning, I wrote that Mario Draghi, head of the European Central Bank, “is perhaps the only person on the planet who, with a few words, could mostly end the euro zone’s crisis.” Ex-Fed official Joseph Gagnon e-mails to disagree:
There are two other individuals who have the same power as Draghi to end the euro crisis: Ben Bernanke and Zhou Xiaochuan. The Fed could do the next QE3 entirely in Spanish and Italian bonds and it would not require a vote in Congress or Presidential approval. It would push the euro up against the dollar, but Europeans would not be in a position to complain. The People’s Bank of China is estimated to hold nearly 1 trillion euros already and it could switch them from German bonds to Spanish bonds.