|That does not really fit in with what McCarthy actually said, though. He spoke specifically about public disagreement.|
The alternative is that Colm McCarthy, respected economist and advisor to multiple Irish governments, cant tell the difference between the ECB and the EU.
Probabilities of that approach zero.
|Anyway, I think it is doing a huge dis-service to Colm McCarthy to describe him as a celebrity economist.|
And then of course there are those economists who are breezily dismissed as being the dogs who didnt bark...
Economists just cant win. If they get public attention, theyre attacked as publicity whores. If they dont get public attention, theyre attacked as not doing enough to warn us in advance.
|I would not put them in the same league at all.|
|Yet Ireland is complying with the terms of her bailout and Greece is not. S&P get this but I should not???|
And Ireland sovereign credit rating is utterly anchored to perhaps the worst bunch of peripheral banks in Europe. And whilst you can see clear blue sky between Greece and Ireland, your opinion is irrelevant. The markets do see the link, as Irish bond rates climbed in response to the ECBs hysteria:
Look at the Irish 10 year rate
In mid May its fairly stable, with even a minor decline in rates.
May 18th: ECB opens its big trap, blabbing on about dropping Greek debt as collateral and with it ending banking liquidity support. Must be the first time a Central Bank tries to undermine confidence in its own banking system.
May 19th-May 20th: Irish bond rates begin to rise, taking off like a rocket on May 20th as the full implications of the ECBs threats are digested. Finish up just over 11% by May 27th.
The goal of the ECB programme in Ireland is to get us back into the markets and their stupid, hysterical threats are actually sabotaging that effort. The ECB needs to figure out what the hell they want and then they need to get on with it, making sure that *all* their public comments are made with this goal in mind. If they want to see Ireland back in the markets, then they need to stop making stupid comments that undermine Irelands chances of getting back into the market.
LBS is also running around screaming and waving his arms in the air like Chicken Little, doing his best to convince anyone and everyone that its completely and totally *impossible* to organise a default in any way, shape or form. Which is only going to make it all the harder to actually get the job done. As must happen.
|The quality of the collateral in the ECB has already been the subject of adverse comment - allowing face valuation of collateral from a country that had already defaulted seems more than a little ridiculous.|
The quality of Greek debt would actually be stronger after a default (once it was clear the Greeks could cope with their remaining debt, post-default) than it currently is when *everyone*, including the ECB, expects Greek default. If your debt is still honoured after a default, you can be more certain of it than you were before the default.
As for the ECBs collateral rules - they set their own collateral rules. Theres nothing to say they couldnt change them, if they wanted to. But it seems theyre currently trying to play politics to avoid having to take a hit on their balance sheet in an era where its far from the certain that the Germans will recapitalise them.