But when I saw that Carl-Ludwig Thiele, a member of the Bundesbank Board, has just complained about even the limited help that the ECB has been providing stricken governments by bond-buying, I decided that I should try to convince the Germans directly that they are one of the major causes of the crisis. Here's a post I just left on the Deutche Börse Group's news site.
Here is yet another demonstration of Germany preventing the ECB from solving the Euro crisis. We have just had the ECB print 489 billion euros that were thrown at banks on the 21s of December. The banks then promptly parked the money back with the ECB.
I suppose that at least that way, the money won't be producing the inflation that normally QE should produce.
But suppose that instead of lending banks the money, the ECB lent the Greek government the money at the same rates offered to banks - 1% instead of the 21.14% that Greece currently has to pay on the bond markets. With 340 billion - far less than the ECB has already printed for the banks, Greece could pay off its entire national debt. France would be able to write off the €56.7 billion of exposure, Germany would recover €33.9 billion, and the UK would be able to cancel €14.6 billion
Everyone wins. So why don't we do it?
Well, people are convinced that such lending is prevented by the Treaty of Lisbon. And both Mario Draghi and the Bundesbank insist that it is impossible. This is either a deliberate lie, or else they haven't read the Treaty. Paragraph 2 of article 123 of the treaty specifically permits central bank lending to "publicly-owned credit institutions". I've checked with the BCE, and they agree that this means that if an institution such as the French Caisse des Depots was to ask the BCE for 340 billion at the next open day (29th Feb), they would be able to lend it on to the Greeks to pay off the national debt.
Will people in Germany please please stop blocking this extremely sensible proposition. The story that it would lead to inflation is simply wrong. Since much of the money lent by banks to the Greeks never existed - it was created out of thin air by the fractional reserve banking trick, it will just disappear with a puff of smoke when the Greeks pay it off. No inflation whatsover.
Please Germany, you are largely responsible for this insanity. Can you think this one through a bit?