ECB saves Greece in a new $5 billion money-print round

ECB has secretly decided to finance directly an EU government, informed the German newspaper Die Welt. This has happened at the last meeting of The Governing Council. The formal procedure is an increase of the quantity of government bonds that Bank of Greece can accept as collateral in exchange for emergency loans. Till Thursday the limit was 3 billion Euros and now it is 7 billion Euros, that means another 4 billion Euros ($5 billion) for the bankrupted Greek government.

Generally buying bonds and financing directly the Government is forbidden for the ECB and for the inferior to it national central banks. The "emergency" option is a buffer that is to be used in very bad times - and only for a short time. The money must be repaid back as soon as possible. The emergency buffer is not intended to stay exhausted for months or years. And when more money are needed - to be increased.

Greece is not in an emergency situation. Emergency means an earthquake, flooding or tornado. Greece is out of money not because of such sudden and unpredictable event, but because of its wasting time strategy. Greece had had already 3 years to implement reforms and stabilize its finances. It was helped by more than $150 billion in bailout funds. Additionally another $150 billion of its debt was erased. And after all this Greece is still in money lack, and needs another $5 billion to survive till September when bailout creditors will decide what to do.

So after receiving in bailout loans and debt restructuring more that $300 billion, Greece asks for another $5 billion and calls this an "emergency" :)

But what is so emergent? This is no emergency. This is just laziness and an endless cry for someone else's money.

ECB is in a direct breach of its rules. It de facto allows a direct financing of a government by the Central bank. Exactly in ECB case this is absolutely forbidden (For FED and BoJ for instance it is not forbidden). Using the emergency option is a swindle, as situation is not a crisis one, but an intentionally created one. If ECB is to do such compromises, then everyone can enter himself in a money lack and then ask for an "emergency" help...

The direct financing of the government by the Central bank is the most powerful tool of money print. The Central bank is printing money and is exchanging it for useless government bonds. Exactly because this is money-print, it is forbidden.

ECB obviously is driving the Euro towards an entire crash...

August 4th 2012

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