Fairly aggressive but not unexpected

Late on Monday night, the ECB decided to maintain its liquidity freeze on the banking system. But in a highly contentious move, opted to tighten the collateral rules it imposes on lenders to access the lifeline, intensifying the squeeze on the cash-starved banks, which are set to remain closed for another two days.
The ECB said the move was based on the deteriorating quality of the bank collateral, most of which is made up of Greek government bonds. “In this context, the Governing Council decided today to adjust the haircuts on collateral accepted by the Bank of Greece for ELA,” it said.

So there’s no way the banks can reopen….

Puts a fair amount of pressure on, eh?

17 thoughts on “Fairly aggressive but not unexpected”

  1. Bloke in Costa Rica

    Is their attitude, “when you have ’em by the balls, their hearts and minds will follow?” It’s certainly upping the ante, although whether this level of brinkmanship is wise at this point is another matter. Frankly, I think it’s madness. I don’t think it’s an exaggeration that this level of intransigence and belligerent rhetoric (on both sides) in European politics is the sort of thing we have previously seen immediately prior to the outbreak of hostilities. Not that I think there will be actual shooting, but de-escalating it is going to be a nightmare.

  2. abacab

    Except the idiot lefties will look at you in Switzerland you neoliberal bastard and somehow YOU’LL be the external bogeyman. ‘Cos the Euro is a neoliberal project. The Euro has always been a neoliberal project.

  3. Surreptitious Evil

    ‘Citation needed.’

    For once I agree with him.

    (If he means it in an ‘Eastasia has always been at war with Eurasia’ kind of way.)

  4. This guy Kazarian was on the Today programme this morning:

    ”Mr. Kazarian’s argument stands or falls on a pretty simple accounting principle. If Greece’s debt were to be measured under the International Public Sector Accounting Standards, which most governments use, then its debt figure would need to be adjusted downward, instead of being recognized at its face value of 318 billion euros.

    That is because there have been a series of adjustments to Greece’s debt over the years, including a restructuring, debt maturity extensions and interest rate reductions that should, if international accounting rules were applied, bring down the debt’s value.

    By doing that and taking into account the assets owned by Greece, the overall net debt figure falls sharply to 32 billion euros.

    “How do you change the terms of a debt contract and ignore the impact on the debt?” Mr. Kazarian asked in an interview. “You can’t. You just can’t — the size of the debt must come down to its economic reality.””

    So the Greeks have had their debt relief but the Eurozone, IMF etc can’t admit it.

    What a fucking mess.

  5. He’s right but wrong. Right in that the debt has been written down, to perhaps half the headline value, through concessions on interest rates and maturities. Wrong in that it’s not as low a value as he says.

    And yes, it’s been done this way so that every government in the eurozone can say “Look, we’ve not lost your money!” to their own taxpayers when they in fact have.

  6. “Neo-Liberalism” is the Keyzer Soze of the left.

    It has absolutely no meaning – which in reality translates into anything a leftist author wants it to mean.

    It really is no different to Rik from the Young Ones shouting “Fascist” at people.

    P.S. RIP Rik Mayall

  7. So Tsipras wants Greek government debt to be partially written off, thereby reducing the value of collateral held by Greek banks at the ECB, and requiring a fresh injection of capital to keep the banks solvent from a Government that doesn’t have the cash. God, this is fun.

  8. “it’s been done this way so that every government in the eurozone can say “Look, we’ve not lost your money!” to their own taxpayers when they in fact have.”

    Sounds like Brown on the British banks.

  9. The big question for me is this. Did the founders of EMU intend this sort of shemozzle, expecting it to lead to the extension of Brussels’ power over member states? Or were they just headstrong reckless twats?

  10. And the specific extension of power sought by the EMU founders is the reduction of member nation states to the status of a provinces. Greece is a good place to start because its economy is small and poorly governed.

  11. These people celebrating about the no vote – these greeks – are they still celebrating today? Banks will open when?

Leave a Reply

Your email address will not be published. Required fields are marked *