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Many have mentioned that the ECB will no longer help fund Greek banks, but then again the ECB owns a lot of Greek debt.

Part of the Greek "bailout" currently under discussion involves the ECB swapping its holdings of Greek bonds for newly issued EFSF bonds, at face value. So the EFSF will be left holding the bag.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 05:35:25 PM EST
[ Parent ]
And once again, the BuBa gets someone who is not the BuBa to pay for maintaining the BuBa's currency policy.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 05:38:05 PM EST
[ Parent ]
And they are on the road selling EFSF bonds to China?
by Upstate NY on Tue Feb 14th, 2012 at 06:03:59 PM EST
[ Parent ]
They are making noises about wanting to, but I would not place any expensive bets on the Chinese buying into that particular pyramid scam. I have a hard time seeing what China would get better from that that they couldn't gain from dealing bilaterally with the countries being ECB'ed.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:07:07 PM EST
[ Parent ]
China is not buying.

I keep wondering whether Regling is a useful idiot or a master snake-oil salesman.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:07:29 PM EST
[ Parent ]
True believers often make the most convincing salesmen.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 15th, 2012 at 12:29:42 PM EST
[ Parent ]
Part of the Greek "bailout" currently under discussion involves the ECB swapping its holdings of Greek bonds for newly issued EFSF bonds, at face value. So the EFSF will be left holding the bag.

You really couldn't make this shit up:

Jens Weidmann says the ECB cannot participate in a debt restructuring as this would amount to monetary financing; he also seems to oppose forgoing on the ECB's profits; also expresses criticism of the expansion of the ECB's balance sheet;
(Eurointelligence daily briefing summary, 15 February 2012)

The reference to "forgoing profits" is to the bond swap with the EFSF at par. The reason is that Greek bonds were bought by the ECB at a higher yield than the EFSF bond yield, and a swap at par value, while representing no loss in "hold to maturity" accounting, is actually a loss (forgoing of profits due to the lower yields).

So Weidmann really does think it's right for the ECB to make a profit off the penal rates of lending to Greece.

Weidmann opposes the eurosystem's help for Greece

Jens Weidmann is opposed to any mechanism like a rapid distribution of the national central banks' gains on Greek bonds to the governments that would lead to a contribution by the eurosystem to the second rescue package for Greece. ,,The key point is that we (the eurosystem's central banks) are not allowed to renounce to demands against a state. This would be a form of monetary financing of that state", Weidmann said in an interview with Handelsblatt. The Bundesbank president appeared to directly contradict ECB executive board member Benoit Coeuré who had told Libération on Tuesday: ,,Should there be a profit (on Greek bonds), like all monetary revenues, it is to be distributed to the (member) states", the board member had said. "They could use it to contribute to the sustainability of Greek debt".

Weidmann further stressed that he was worried about the increasing risks that the eurosystem is taking on its balance sheet. Examples are the SMP and the loosening of the collateral framework by the central banks in France, Italy, Spain, Portugal, Austria, Ireland and Cyprus with quality standards below the standards currently in place in the eurosystem. ,,Also Mr. Draghi has conceded that with this acceptance of additional collateral the risks increase", the German central banker said. Weidmann announced that the Bundesbank would probably announce an increase of its provisions of €1.6bn last year at its annual press conference in March in order to cover potential risks and losses.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Feb 15th, 2012 at 05:46:15 PM EST
[ Parent ]
There needs to be an article in the next treaty revision saying that nobody who has ever served with the Bundesbank may be appointed to any position of trust in the ECB.

Insane, the lot of them.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Feb 15th, 2012 at 05:55:09 PM EST
[ Parent ]
who are these people, we have their names, but who are they, really?

and who are the birds of similar feather they flock to?

lemme guess... the usual suspects...the utility companies, the MIC, the banksters, and the slimeball meatpuppets who are the interface with the hypermediated public, you know the donkeys we pin our illusional tails of hope onto when we go vote.

how do they face their children? how do they rationalise plunging a continent into perdition, to avoid losing even one cent on their euros? how do they glide from meeting to another without recognition or the opprobrium they deserve? how are they able to continue to exist surrounded by the fruits of their destruction, veiled by firewalls of force? in this age of free(er) information, why aren't their faces plastered all over as enemies of the state? have they vanished into the mist of our own inability to connect dots?

has the capture really gone so far that our very minds are enslaved as to a cult, so whole populations slide into collective stockholm syndrome?

TINA may ass, it's that we have been too well taught that any alternative is unthinkable, so it can be right under our own noses and we'll see right through it as if it weren't there.

how did we get so cognitively messed up? and other that blogviating, wtf can we do to wake up from this insanely perverse reiteration of the worst of who we are, ruling events with such orwellian effectiveness? is it that we have been lied to for so long, truth flies under the radar? lays like a diamond under windblown sand? waits like an acorn in dry moss for the moisture needed for its transformation to begin?

is knowledge what we need? is that the rain we await?

a big thanks to all here for the space to share these concerns, it means a lot to me to have found such a funny, hip and wised up group of folks to vent to/with.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Feb 15th, 2012 at 07:32:17 PM EST
[ Parent ]
Once again, the governor of the BuBa shows how dear to his heart is the sacred principle of the independence of the ECB.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 16th, 2012 at 01:10:33 AM EST
[ Parent ]
Well, he does sit on the Governing Council of the ECB.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Thu Feb 16th, 2012 at 08:34:07 AM EST
[ Parent ]
True. It's only the confidentiality of ECB deliberations that he's showing his respect for.

Confidentiality that Germany and the BuBa insisted upon at the time...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 16th, 2012 at 12:40:23 PM EST
[ Parent ]
IOKIYAG
by afew (afew(a in a circle)eurotrib_dot_com) on Thu Feb 16th, 2012 at 01:50:12 PM EST
[ Parent ]

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