Interview context

Mario Draghi, former Italian prime minister and former president of the European Central Bank, spoke with Bloomberg in an interview recorded for a podcast at an event in New York. The questions came from Lisa Abramowicz at a Citadel Securities conference, who asked him about images of disorder in Paris and Milan. Reports describe youth protests in France and Italy that often turned violent, and La Stampa also names Spain among the countries affected. Draghi said the motivations behind the unrest differ from country to country. He pointed to one shared factor, elections of great importance due next year, but described that link as only the frame of the picture.

Blocked expectations

Draghi called blocked expectations the most solid explanation for the unrest, because young people believe nobody is listening to them.

“I think the most robust explanation is that it's a case of blocked expectations”

In his account, young people see social dynamics as blocked, find it hard to get a job, and feel unprepared for a society undergoing very rapid technological change. He said most people want growth with social justice, and for young people that means justice between generations. When growth falters, delivering that becomes very difficult, and the result is anxiety. He also said Europe as a whole has had, and still has, a growth problem, while forecasts have been revised slightly upward and the economy is doing somewhat better.

Violence and amplifiers

Draghi said violence must be condemned in every circumstance. He argued that political actors who play on mass dynamics, together with street confrontations and clashes, work more as amplifiers than as true explanations. In his view, these factors can intensify the unrest without accounting for the discontent beneath it. The interview treated the protests as a wave spanning several countries rather than a problem confined to one capital.

France and the ECB

Draghi described France as having a specific fiscal problem: a budget deficit for many years and a debt-to-GDP ratio rising for more than a decade, perhaps even fifteen years. In a global context of rapid interest-rate rises, he said that deficit looks hard to manage. Nothing in itself, he said, justifies an ECB intervention. Asked whether the bank would step in to narrow bond spreads, he said those spreads reflect a new pricing of fiscal and political risk, and that the threshold for intervention is rather high for now. He noted that inflation rose further according to the latest data. The tools could be used only if two conditions were present, contagion and a malfunction of the transmission mechanism, and he said he found neither, since bank lending had increased in the latest credit-flow data. He asked that his remarks not be read as what the ECB should do, but as what he would do in its place.