Draghi, one for the birds On Thursday, ECB president Mario Draghi was in Milan to give a speech at Università Bocconi. It's a charming read, as the policymaker reviews the eurozone crisis in pleasantly digestible terms even by Friday morning standards. Once the crisis was underway, and sovereign spreads had widened out, a debate started: It was a situation which has brought into focus the nature of the "ideal" fiscal consolidation - one which reduces the deficit and the debt with the least negative consequences for a country's GDP. The prevailing evidence indicates that it should be concentrated on reductions in current spending and not on tax increases. Even those who do not share this approach agree, however, that it is essential that the process be perceived as credible, irreversible and structural... He then goes on to explain how the traditional monetary transmission mechanism - of lowering policy rates so that rates go down for the whole economy - is broken. Therefore the ECB got its more accommodating grove on, and pulled out a new acronym from the toolbox: OMT. More importantly, there is time to pause and reflect about the past, present and future (these are students he's talking to after all): Tommaso Padoa-Schioppa's tenure at the Banca d'Italia and at the European Commission was punctuated by realignments in the exchange rate mechanism of the European Monetary System. He famously pointed out the key problem of the "inconsistent quartet" - fixed exchange rates, free trade, capital mobility and national monetary policies. The single currency was identified as the solution. Today, we see that this solution was incomplete. The crisis has exposed the need to complete economic and monetary union. As luck would have it, there are four shiny new things now: In my joint work with the Presidents of the European Council, the European Commission and the Eurogroup, we have identified four pillars on which to build a stable and prosperous Europe: a banking union with a single supervisor; a fiscal union that can effectively prevent and correct unsustainable budgets; an economic union that can guarantee sufficient competitiveness to sustain high employment; and a political union that can deeply engage euro area citizens. All well and good. But, one more thing... As you know, in recent months I have repeatedly stressed the irreversibility of the euro. This was precisely the sentiment of one of Tommaso's most noted quips. Speaking in 2004 about the "EMU," an abbreviation for Economic and Monetary Union, he remarked that it was also the name of an Australian bird rather like an ostrich. And he added: "Neither of them can go backwards." Clever! Know who's also clever? That Gary Jenkins over at Swordfish Research: Yes Mr Draghi but a cynic might say that the real resemblance between Economic and Monetary Union and an Ostrich and Emu is that it sticks its head in the sand at the sign of trouble and in its current format has little chance of taking off...