Mario Draghi, the new head of the European Central Bank, says that the bank remains committed to keeping inflation low, which he believes is the key to defending the ECB’s “credibility.” Paul Krugman’s head explodes:

[The ECB] will end up as the highly credible defender of the value of a currency that no longer exists.

I just spoke to an old friend who works as in finance for one of the major banks. He is a serious Catholic, and is disgusted with the culture of Wall Street, even though he works there (no doubt because he works there, and sees it from within). But he’s also disappointed with Occupy, because he says we need a serious and effective movement to hold Wall Street accountable. Anyway, he tells me that the people on his team at the bank believe that “there’s no imaginable way any country is ever going to pay all their debt off.” The best we can hope for, he says, is that the ECB finds some way to prevent sovereign defaults in Europe. My friend was a deep Euroskeptic from the beginning, but says as much as he hates to concede it, Europe has gone too far to back out now. They’re either going to have to yield sovereignty to political union, or face a second Great Depression.

“Either way, nobody believes there will be any growth at all in Europe for at least a decade,” he said.

He added too that he’s surprised to hear economist and financiers in his circles talking a lot these days about population and demographics in Europe. “It used to be that only far-right wingers talked about population decline, but now it’s going mainstream,” he said. Without a growing population, there can be no economic growth. Europe is going to stagnate economically for this reason too.

Finally, my friend said the team at his bank are now talking about the fear of wars in Europe coming out of this. “We’re going to see governments resigning left and right,” he said. “No leader is going to want to break the news to his people about how they’re going to have to accept a much lower standard of living, because the money just isn’t there. This is going to cause a lot of unrest. We’ve gotten so used to things being stable there, but this economic crisis is going to stir up a lot of resentments. It’s a big deal.”

I transcribe, you decide…