Thursday’s article in The New York Times by writers Jack Ewing and Nicholas Kulish about the “rift” between factions over the role of the European Central Bank (ECB) was a distraction and misdirected attention from what is really happening there. The piece makes it sound as though the ECB is standing firm against pressures to have it buy up the debt from Greece and Italy in order to keep the debt “contagion” from spreading elsewhere.
For instance, the article quotes Spain’s Prime Minister, Jose Luis Rodriguez Zapatero, as saying that he expected the ECB to do whatever was necessary, for “this is what we transferred power for…[to] defend the common policy and its countries.” Of course Zapatero would have to say that or he would be gone, just as unelected bankers replaced elected leaders in Greece and Italy. Just a reminder as to who is in charge was reflected by the recent rise in Spain’s borrowing costs, the highest since 1997, and exceeding the “default” level of 7 percent on its 10-year bond. But nothing was said in the article that Zapatero’s comments reflected a desire to save his skin.
In fact the ECB has been taking an active role economically and politically by buying up the debt of those countries in massive amounts, already in excess of $250 billion, and manipulating interest rates to favor the newly installed rulers Mario Monti in Italy and Lucas Papademos in Greece. But authors Ewing and Kulish prefer to present the ECB as being run by “fiercely conservative stewards” who have “steadfastly resisted letting it take up the mantle of lender of last resort.” And to support that falsehood the authors enlisted the help of