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| Jean-Claude Trichet: Band-Aid sticker of last resort |
And he would have looked forward to cementing the ECB’s reputation as a prudent manager of interest rates, a controller of inflation, and an organization that could hold its own with the Federal Reserve.
Now, as his time as the ECB’s second president comes to an end, he’s become the key tool in sticking Band-Aids over the cracks in Europe’s financial system. Notably, he’s not just become the buyer of last resort for much of peripheral Europe’s bond inventory but the buyer of only resort.
If shares were available in the ECB then, given its portfolio of Greece, Ireland, Portugal and the like, you’d short the hell out of them. If debts are restructured, then it’s the ECB that faces the biggest loss. People are beginning to ask the unthinkable: how long can the ECB go on buying unprecedented amounts of bonds, and could it even get to the point that the ECB itself has to be rescued, almost certainly in that event by the Bundesbank, whose key powers it has assumed?
The trouble is, there’s little incentive for any investor to buy many EU government bonds.
