From the Wall Street Journal: How ECB Chief Outflanked German Foe in Fight for Euro – WSJ.com. A 2500 word epic saga about how Super-Mario f..screwed over Jens Weidmann and turned the ECB from a Germanic type institution into a Banco d’Italia type inflation machine.
That evening, he phoned Mr. Schäuble, who was vacationing on the sandy North Sea island of Sylt, and asked him to help publicly defend the ECB from German media fury.
Mr. Schäuble, the German government’s strongest believer in the euro and European unity, agreed, overriding finance-ministry officials who advised him not to comment on decisions of the central bank.
Mr. Draghi also called French President François Hollande and asked him to lobby Ms. Merkel for a joint Franco-German declaration of support. The chancellor, who was on a hiking vacation in the Alps, told Mr. Hollande she was comfortable with Mr. Draghi’s move but wary of making a public statement on ECB matters. The two leaders’ aides negotiated a wording.
The next morning, the Bundesbank launched its expected counteroffensive to Mr. Draghi’s speech, attacking bond-buying as “problematic” and “not the most sensible” way to tackle the crisis.
But at lunchtime, Mr. Schäuble issued a statement welcoming Mr. Draghi’s promise to preserve the euro. Soon afterward, Ms. Merkel and Mr. Hollande declared their determination to do “everything” to defend the euro and called on “European institutions” as well as national governments to do their duty.
Berlin had broken with the Bundesbank. Mr. Draghi had the cover he wanted.
On Aug. 1, a day before the ECB’s Governing Council met to approve Mr. Draghi’s plan, the Bundesbank website published an in-house interview with Mr. Weidmann in which he argued that his institution deserved special influence inside the ECB. “We are the largest and most important central bank in the Eurosystem and we have a greater say than many other central banks,” he said.
But Mr. Weidmann lacked allies on the ECB’s Governing Council. Over a dinner at ECB headquarters on Aug. 1, the council members drew up a plan for bond buying.
Read it (all) and weep.