http://globaleconomicanalysis.blogspot.com/2011/05/eu-seeks-collateral-for-more-greek-aid.html
Whole World Except ECB Thinks Default is Coming
If Trichet wants to address the world he would be advised to ponder what the world minus the ECB thinks of his statements. With the ECB emergency bailout fund nearly used up, and with Germany and Finland in opposition to more bailouts, it has now come down to "margin maintenance", which is to say, no more loans without collateral.
What if Greece tells the ECB to "go to hell"? What if Ireland does the same? What happens as soon as Spain needs a bailout?
I will tell you what happens: This whole mess will quickly go spinning totally and completely out of control. Thus, all this posturing and grandstanding by Trichet is not doing him or the ECB any good. The sooner Trichet accepts the obvious, the better off Europe will be.
The idea that sovereign debt cannot be defaulted on is preposterous. If it wasn't preposterous, Greek bonds would be trading at the same yield as German bonds.
If the bond market consistently and persistently insists haircuts are coming, I am not going to argue.
Perhaps at the emergency meeting this weekend, they manage to put another Band-Aid on the wound. Unfortunately, what's needed is an amputation.
Whole World Except ECB Thinks Default is Coming
If Trichet wants to address the world he would be advised to ponder what the world minus the ECB thinks of his statements. With the ECB emergency bailout fund nearly used up, and with Germany and Finland in opposition to more bailouts, it has now come down to "margin maintenance", which is to say, no more loans without collateral.
What if Greece tells the ECB to "go to hell"? What if Ireland does the same? What happens as soon as Spain needs a bailout?
I will tell you what happens: This whole mess will quickly go spinning totally and completely out of control. Thus, all this posturing and grandstanding by Trichet is not doing him or the ECB any good. The sooner Trichet accepts the obvious, the better off Europe will be.
The idea that sovereign debt cannot be defaulted on is preposterous. If it wasn't preposterous, Greek bonds would be trading at the same yield as German bonds.
If the bond market consistently and persistently insists haircuts are coming, I am not going to argue.
Perhaps at the emergency meeting this weekend, they manage to put another Band-Aid on the wound. Unfortunately, what's needed is an amputation.
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