ECB Bin Smaghi pops up to lecture Greeks on defaultECB Bin Smaghi pops up to lecture Greeks on default
Last Updated on Thursday, 14 April 2011 10:27 Thursday, 14 April 2011 10:09
After taking pot shots at Ireland yesterday and attempting to steer national discussion to the role of governments in the debt crisis, European Central Bank Executive Board member Lorenzo Bini Smaghi took time off today to lecture the Greeks. The theme was much the same. It was the Greek peoples fault, their government's faults, their banks fault. Anybody's fault but that of the ECB. The goal was much the same. Steer national discussion to the role of the government and direct it away from the role of the ECB.
Mr. Bini Smaghi was painting a dire picture of what would happen if Greece restructures its debts. He told the Italian business daily Il Sole 24 Ore that "The Greek economy would be on its knees, with devastating effects on social cohesion and the maintenance of democracy in that country."
"According to our analysis, a debt restructuring would result in the failure of a large part of Greece's banking system," he added.
For the second time in two days, Mr. Bini Smaghi has been threatening financial armageddon to any country honourable enough not to place the private debts of banks onto the shoulders of taxpayers. The logic of Mr. Bini Smaghi is as follows; that people elected governments who regulated the banks and therefore when banks fail the people should pay. Using that line of argument, it is reasonable to argue that the ECB should be left paying for the entire mess in the peripheral countries as they were ultimately responsible for regulation of central banks and the banking sector.
For the second time in two days, Mr. Bini Smaghi wisely choose not to focus on the role of the ECB in creating the debt crisis.
"Ultimately it's up to Greece to decide the way forward, given that it will suffer the worst consequences. But other countries must avoid pushing it towards a catastrophe," he told the paper. That the ECB is pushing Greece and Ireland towards a catastrophe seems lost to this particular ECB board member.
