The past is a different country. The key players then were able to maintain pretty tight control. We now have a layer of financialisation, that is little understood and of frightening complexity, sitting atop even the most tractable conundrum in the underlying markets – not to mind this mutli-faceted problem.
Would just make me wonder ‘What the hell the ECB and EU are waiting for?
If it is such a good idea why not do it?
Maybe the question should be who’s balance sheets are at risk behind the headlines and nominal holders of the bonds?
As Mr. Eichengren points out and has long been discussed here, any resolution to the crisis is going to require the ECB to play a large part. They are, after all, the ones with the ‘money’. So far, they are playing dumb which is at best unhelpful. Inevitability has a great way of making “so far” sound like an incredibly stupid response.
@hogan,
Agreed. But I think the ECB, being the only EU institution with some capability – and having been forced out on a limb to keep the show on the road, wants some firm commitment from the politicians to reduce its exposure, provide a solid basis for effective intervention and alllow for an orderly retreat. The game in Greece (and Portugal) is very different from the game in Ireland. Have we heard any more about this ‘Facility for Banks under Restructuring’?
@Paul Hunt
“The game in Greece (and Portugal) is very different from the game in Ireland.”
That is only because the banks in Ireland are loaded with assets for which there is no market. The banks in Greece (and I suspect Portugal) are loaded with government assets which the ECB is currently providing a market of last resort for (since they are now worthless for interbank repo).
The same problem is largely true for the Irish state and is the counterpart to the banking crisis. We currently have more problems (as we have a banking and a fiscal crash), but that is not to say that they won’t.
Having said that, we have an easier ‘out’ in that the external trade performance of the country has generally been good.; Greece and Portugal have a long way to go in that regard. ‘Easier’ is a relative term though…
http://ftalphaville.ft.com/blog/2011/05/19/573361/the-ecb-goes-all-in/
“FRANKFURT (MNI) – If Greece were to restructure its sovereign debt, its bonds would cease to be accepted as collateral by the European Central Bank, Executive Board member Juergen Stark said Wednesday, according to an ECB spokesman on Thursday.”
Who here thinks that’s not directed just at Greece?
6 replies on “The Full Brady”
The past is a different country. The key players then were able to maintain pretty tight control. We now have a layer of financialisation, that is little understood and of frightening complexity, sitting atop even the most tractable conundrum in the underlying markets – not to mind this mutli-faceted problem.
Would just make me wonder ‘What the hell the ECB and EU are waiting for?
If it is such a good idea why not do it?
Maybe the question should be who’s balance sheets are at risk behind the headlines and nominal holders of the bonds?
The ECB, in the form of our favourite non-sequiteur artist, are playing dumb – http://ftalphaville.ft.com/blog/2011/05/19/572191/credit-enhancing-a-greek-restructuring/
As Mr. Eichengren points out and has long been discussed here, any resolution to the crisis is going to require the ECB to play a large part. They are, after all, the ones with the ‘money’. So far, they are playing dumb which is at best unhelpful. Inevitability has a great way of making “so far” sound like an incredibly stupid response.
@hogan,
Agreed. But I think the ECB, being the only EU institution with some capability – and having been forced out on a limb to keep the show on the road, wants some firm commitment from the politicians to reduce its exposure, provide a solid basis for effective intervention and alllow for an orderly retreat. The game in Greece (and Portugal) is very different from the game in Ireland. Have we heard any more about this ‘Facility for Banks under Restructuring’?
@Paul Hunt
“The game in Greece (and Portugal) is very different from the game in Ireland.”
That is only because the banks in Ireland are loaded with assets for which there is no market. The banks in Greece (and I suspect Portugal) are loaded with government assets which the ECB is currently providing a market of last resort for (since they are now worthless for interbank repo).
The same problem is largely true for the Irish state and is the counterpart to the banking crisis. We currently have more problems (as we have a banking and a fiscal crash), but that is not to say that they won’t.
Having said that, we have an easier ‘out’ in that the external trade performance of the country has generally been good.; Greece and Portugal have a long way to go in that regard. ‘Easier’ is a relative term though…
http://ftalphaville.ft.com/blog/2011/05/19/573361/the-ecb-goes-all-in/
“FRANKFURT (MNI) – If Greece were to restructure its sovereign debt, its bonds would cease to be accepted as collateral by the European Central Bank, Executive Board member Juergen Stark said Wednesday, according to an ECB spokesman on Thursday.”
Who here thinks that’s not directed just at Greece?