4 ms·

> and the ECB no longer has the means to do much to stop it This is incorrect. The ECB is the emitter of Euros. They run the whole system, so they always have

> and the ECB no longer has the means to do much to stop it This is incorrect. The ECB is the emitter of Euros. They run the whole system, so they always have the option to buy government bonds, for example. Now, whether the politics will allow that to happen is not necessarily obvious. But that's a separate question, let's not get confused about that.

krona 8y ago
> The ECB is the emitter of Euros. They run the whole system, so they always have the option to buy government bonds, for example. There is a 33% limit imposed on the total amount of any country’s public sector debt that can be held by the ECB. Now what you're saying is not just that the limit be increased but also that the ECB only buys Italian bonds, creating a moral hazard arguably as bad as any other outcome.
JumpCrisscross 8y ago
> they always have the option to buy government bonds The ECB is uniquely restricted, compared with other central banks, by "Maastricht treaty provisions that prohibit the ECB from financing member states" [1]. (These limits are "in terms of proportion of overall public debt (33 per cent) and of each country’s specific debt issue (33 per cent).") [1] https://www.ft.com/content/8c3ea45c-acd5-11e7-beba-5521c713abf4 https://www.ft.com/content/8c3ea45c-acd5-11e7-beba-5521c713a...
- repolfx 8y ago
  The EU institutions invariably ignore treaties the moment they become problematic to the further progress of the EU project. It doesn't matter what the Maastrict treaty says - if the political will is there to print euros to bail out Italy it will happen, if there isn't, it won't. Consider what happened last time the treaties forbade bailouts: https://www.reuters.com/article/us-france-lagarde-idUSTRE6BH0V020101218 https://www.reuters.com/article/us-france-lagarde-idUSTRE6BH... “We violated all the rules because we wanted to close ranks and really rescue the euro zone,” Lagarde was quoted as saying. “The Treaty of Lisbon was very straight-forward. No bailout.” The summit approved a two-sentence amendment to the treaty at Germany’s behest to permit the creation of a European Stability Mechanism to handle financial crises from 2013.
  - JumpCrisscross 8y ago
    Amending a treaty isn’t the same as ignoring it.
    - repolfx 8y ago
      Clearly the French FinMin (Lagarde) didn't agree with you. But if the 'rules' a group of people agree to are such that they are thrown out the minute they become inconvenient, then the entire concept of a treaty or written law itself becomes irrelevant.

krona 8y ago

> The ECB is the emitter of Euros. They run the whole system, so they always have the option to buy government bonds, for example. There is a 33% limit imposed on the total amount of any country’s public sector debt that can be held by the ECB. Now what you're saying is not just that the limit be increased but also that the ECB only buys Italian bonds, creating a moral hazard arguably as bad as any other outcome.

JumpCrisscross 8y ago

> they always have the option to buy government bonds The ECB is uniquely restricted, compared with other central banks, by "Maastricht treaty provisions that prohibit the ECB from financing member states" [1]. (These limits are "in terms of proportion of overall public debt (33 per cent) and of each country’s specific debt issue (33 per cent).") [1] https://www.ft.com/content/8c3ea45c-acd5-11e7-beba-5521c713abf4 https://www.ft.com/content/8c3ea45c-acd5-11e7-beba-5521c713a...

repolfx 8y ago
The EU institutions invariably ignore treaties the moment they become problematic to the further progress of the EU project. It doesn't matter what the Maastrict treaty says - if the political will is there to print euros to bail out Italy it will happen, if there isn't, it won't. Consider what happened last time the treaties forbade bailouts: https://www.reuters.com/article/us-france-lagarde-idUSTRE6BH0V020101218 https://www.reuters.com/article/us-france-lagarde-idUSTRE6BH... “We violated all the rules because we wanted to close ranks and really rescue the euro zone,” Lagarde was quoted as saying. “The Treaty of Lisbon was very straight-forward. No bailout.” The summit approved a two-sentence amendment to the treaty at Germany’s behest to permit the creation of a European Stability Mechanism to handle financial crises from 2013.
- JumpCrisscross 8y ago
  Amending a treaty isn’t the same as ignoring it.
  - repolfx 8y ago
    Clearly the French FinMin (Lagarde) didn't agree with you. But if the 'rules' a group of people agree to are such that they are thrown out the minute they become inconvenient, then the entire concept of a treaty or written law itself becomes irrelevant.