Draghi's eurozone steroids

Some two or three years ago, the European Central Bank (ECB) would have been seen as revolutionary and courageous, if it had then set about buying bank debt in the form of bonds, including junk from Greece and Cyprus.

Today, with the eurozone economy still flatlining five years after its crisis erupted, the ECB inauguration of a two-year programme to nationalise loans to households and businesses - to the tune of several hundred billions of euros - looks like a slightly desperate last role of the dice.

Just think of it: the child and heir of Germany's Bundesbank, the very cynosure of monetary conservatism, is in effect lending directly to the real economy, in scale.

And, what's more, it is doing so everywhere in the eurozone, including high risk and highly bruised Cyprus and Greece - although in the Hellenic countries it is limiting its exposure and only buying where a third party expresses an opinion on the quality of the relevant bonds.

But the ECB's abandonment of what might be seen as monetary fundamentalism won't cure the euro area's sclerosis: the best it can do is cover up the symptoms and get the blood pumping a bit more energetically.

As the ECB's president Mario Draghi implied today, all the central bank is really doing is buying time for governments to take more important initiatives.

It is warding off a vicious spiral of disinflationary decline by pushing down the cost of debt - which should be the consequence of throwing into the market a new buyer of debt with unlimited purchasing power (itself).

But it cannot turn low growth Europe into vroom vroom Europe.

Just possibly, the ECB will achieve a useful structural reform, by stimulating the revival in Europe of securitisation, of parcelling debt into bonds to be bought by investors - thus making the wealth and welfare of Europeans less susceptible to the mood swings and fortunes of its huge commercial banks.

But all of this is basically good theatre, rather than the stuff of economic rehabilitation.

Any serious eurozone economic renaissance depends on the region's governments adding reformist determination to their diagnosis of what's gone wrong.

They know and say - especially where it matters, in stagnating France and Italy - that labour and product markets needed to be liberalised and stultifying vested interests crushed, that the costs of doing business need squeezing, that large public sectors need shrinking.

But the doing by these governments - as opposed to the saying - has been timid and lacklustre.

And another thing. It would help a France or Italy to expand and invigorate their private sector if only Germany - and the Netherlands - were less thrifty, if the Northern Europeans bought a bit more from the rest of the world than they sell.

This would require them to spend and improve their lifestyles as an act of European solidarity. Which does not sound so painful, but all recent history suggests it is much much harder than it sounds.