NYT, March 16, 1913, on the eve of World War I: “The news of the assassination of King George has caused profound emotion throughout Greece. Telegrams confirming the report of the murder were received this evening from Prince Nicholas and from the Greek Administrator of Salonika, but full details of the crime are lacking. According to the information received from Salonika the assassin, Schinas, declared when he was arrested that he killed the King because the latter had refused to give him money which he asked for.”
NYT, March 15, 1947, on the eve of the Cold War: “President Trumans message to Congress asking for United States help for Greece and Turkey has caused excitement here. No official circles would give an official statement. Some privately denounced the President for ‘sabotaging the Moscow conference.’ Borba, Communist daily, which is looked upon as a mouthpiece for the Government, commented bitterly on ‘American intervention in Greece.’”
NYT, April 28, 2010, on the eve of European economic collapse?: “With Greece inching closer to the brink of financial collapse, fear that the debt crisis will spread rattled global markets for a second day Wednesday as they awaited a signal from financial leaders gathering in Berlin. Investors have grown increasingly nervous about the fate of Greece, and other economies that use the euro. A recent proposal by European governments to extend 45 billion euros worth of loans, together with a smaller pledge by the International Monetary Fund, to help Greece meet its bills, has done little to calm the markets, and Germany’s statement this week that it must first see more deficit reduction from Greece before fulfilling its pledge has only increased concerns that Europe is not united behind Greece.”
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As someone who gets relatively little news about European monetary issues, I am confused on a few points. I understand Federal Reserve’s relationship with American banks, etc… But I do not know the specifics of the European Central Bank’s relationship with euro-zone banks.
Does anyone know, to what degree, if any, German banks (and other euro-zone banks) are allowed to use Greek bonds as capital against which they might expand the money supply? That is to say: if German banks take a big haircut on Greek bonds, will the supply of euros be additionally reduced as German banks are forced to call in other loans to achieve a legally mandated ratio of debts to assets?
From what I’ve heard in the news, the ECB can buy Greek bonds as long as at least one of the main rating agencies has an investment grade rating on them. But these collateral rules can be loosened if the EBC wants to do so. Rules don’t matter for these peolple. They can find a reason to break any rule. The best example is the Maastricht treaty, which imposed limits on goverment debt and deficits. The treaty was broken during the good times, before the crisis, when some countries broke the 3% deficit limit.
These rules are a complete joke. If they want to print money they will find a way to do so.
The new Euro looks great. Two of them will get you an expresso in 2020.
The European Central Bank, much like the Federal Reserve Bank, is owned and operated by private Central Bankers that standard to gain from enriching their “owners” and backers. That’s not to say that “creating money out of thin air” is a bad thing. It’s to say that most modern day Central Bankers create money out of thin air to benefit their financial markets. As is the case with everything in life, it depends on how things are directed and conducted. If the ECB printed money in a manner that created aggregate demand and jobs, it would benefit the European economy. Instead, the ECB is being utilized to maximize profits for London, Berlin and Amsterdam.
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