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Open market operations on public Euro debt are allowed.

Now, when he says "the ECB cannot help Greece" he's assuming that Greece is bankrupt and needs an ECB loan and there's nothing else that can be done to help Greece.

In fact, Greek traded debt instruments are being subject to speculative attack in the markets and the as part of a "pump-and-dump" operation in which market price volatility is talked up as a sign of insolvency. The ECB could kill the volatility stone dead and enforce a floor on the price, and possibly bankrupt the speculators, through open market operations. That would help the whole Eurozone.

And trading in sovereign debt is a part of monetary policy. Sovereign debt is a key component of the money supply, right after cash.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 10:56:48 AM EST
[ Parent ]
So how can we imagine this possibility doesn't occur to Trichet and others?
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 11:02:50 AM EST
[ Parent ]
Ideological blinders.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 11:07:29 AM EST
[ Parent ]
Jean-Claude Juncker has a frank interview with Quatremer. I should do it as a diary.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Feb 12th, 2010 at 12:18:17 PM EST
[ Parent ]
[ET Moderation Technology™]

link

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:23:13 PM EST
[ Parent ]
let's see:

  1. "keeping their powder dry"?
  2. not going to war against their friends, partners and neihbors the Serious People?
  3. not going to war against the financiers who are absolutely needed to save us from a bigger crisis?
  4. it's probably socialisticky?


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 12:40:18 PM EST
[ Parent ]
I think they don't see a problem so they don't look for a solution.

If there is a problem, they think it's entirely Greece's fiscal position, and the solution is neoliberal reform.

The thought that the bond market might be the problem hasn't crossed their minds.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Fri Feb 12th, 2010 at 02:21:27 PM EST
[ Parent ]

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