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THE ECB IS coming in for some heavy criticism from economists today for its statement last night regarding Greece’s government debt.
The bank’s assertion that Greece’s government, led by recently elected anti-austerity party Syriza, can no longer use its junk-rated debt as collateral for loans for its own commercial banks could trigger a run on the Greek banks, according to experts.
With Bloomberg suggesting that the Greeks could run out of cash before the end of February if its debt ceiling isn’t raised, commentators have claimed that the union’s central bank is behaving in an overtly political manner when its sole role should be that of lender of last resort.
The ECB statement comes in advance of today’s meeting between the new Greek finance minister Yanis Varoufakis and his German counterpart Wolfgang Schaeuble.
Germany is seen as the greatest stumbling block ahead of Greece’s efforts to reduce its massive debts.
In conversation with TheJournal.ie professor of finance at Trinity College Dublin Brian Lucey describes the ECB statement as a ‘very dangerous move indeed’.
“Syriza have a very solid mandate in Greece. Is grinding them into the ground really what the ECB wants to do?” he said.
Quite apart from the political nature of the move, even if they ‘win’ and Syriza is cowed completely into submission, that is hardly a result either.
Syriza would have to resign and point the finger, and if the ECB just ignore the democratic choices of a proud constituent nation, what kind of approach is that?
The ECB’s role should be in encouraging EU states, not crushing them with an obvious bias towards other countries.
Asked how he thought the situation would develop over the coming weeks Lucey said his guess is as good as ours.
But I’m beginning to worry that the ECB are so inept that the worst could actually happen and Greece could be out of the Euro.
When you’ve got a dog on a leash you give them more slack, you don’t tighten the noose and suffocate them entirely but that seems to be news to the ECB.
And if the worst comes to worst, Greece goes to hell in a handbasket and has to leave the Euro, well what’s to stop other troubled countries, including ourselves, from doing the same?
With the way the ECB are playing the game a Mexican standoff situation is a distinct possibility, i.e. nobody wins.
Earlier this morning economist Karl Whelan was softer in his criticism, describing the ECB’s statement as ‘not helpful’.
“It’s not as dramatic as you might think, if there’s no normal loans available the Greek banks have access to Emergency Liquidity Assistance [ELA] from the Greek central bank,” he told RTE.
But these kinds of darkly-worded statements could trigger a run on the banks in Greece and then you’ve got a liquidity crisis.
It’s really just an increasing of the temperature of the situation, but doing that doesn’t necessarily lead to good decisions, and deeming Greece as being only trustworthy in an IMF programme is a very politicised judgement.
I think it would probably be best for the ECB to take a step back from proceedings and let Germany and Greece work it out for themselves, rather than getting caught in the middle of what is essentially a political situation again.
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Regarding previous article re: Israeli/Hamas ceasefire (that has comments closed….)
Netanyahu intends to return to war, no matter what ….Any little excuse, he’s back in there, even when all hostages are returned, he’s back in there…..
@Denis Hourihane: he’s busy keeping himself out of prison.
@Denis Hourihane: I’m sure himself and Trump had a great chat earlier in the week.
They remind me of the cartoon “Pinky and the Brain” planning to take over the world,unfortunately this is reality and with dire consequences.
“remaining homes reconnected”…….Well the upside is they were spared Dancing with the Stars and Fair City for a few days!
@Brian Hunt: What if they were looking forward to it, tho Brian?
@Brian Hunt: .
@Brian Hunt: thanks for confirming that, really, you don’t give a sh it about these people
Anyway a bullet could be lodged in Nethanyahus head!
@Andrew Kenny: love keyboard warriors like yourself. Great at calling for others to kill someone while you sit in safety behind your keyboard.
That was quick
Well whoop de do, will there be lessons learned?
I call B.S on that, 11 properties in the western side of the country still without power since 4/2/25 and it says reconnection
currently unknown.
It’s now 2 am Thursday and my power is still off. The ESB telling porkies…..again.
@Dorothy Giselsson: Oops Wednesday not Thursday.
All elderly people without power should be immediately moved to somewhere safe and warm, The same for vulnerable people,lets get a national plan together, organised at council level.
Still no reconnection date. I’ll be three weeks without mod cons like water, flushing toilet, lights cooking facilities and heating tomorrow night. Is that a record?
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