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ECB cares only about the bonds, it cares nothing about Greece

In case you thought somehow ECB and other banksters cared about helping Greece, they don’t. Their primary, perhaps sole concern, is desperately trying to keep a lid on Greek bond prices. When those bond prices start skittering, all manner of hidden risk, cross-default payments, contagion, and formerly carefully hidden risk comes popping to the surface. When that happens, the stability and solvency of their own institutions may be questioned.

This is precisely what Goldman’s Franceso Garzarelli, co-head of macro and markets research, admitted earlier today in an interview on Bloomberg TV, when he said that the ECB “will have to go big” if the situation in Greece worsens and leads to wider peripheral bond yield spreads.

The central bank’s governor Mark Carney said the risks associated with Greece and its failure so far to reach a deal with its international creditors have grown acute, and threaten to trigger a selloff in financial markets that could ripple through to the wider global economy.”

The underlying problem is, of course, Greece can not pay back the money and loaning is more money simply makes things worse and makes Greece less able to pay back the loans because its economy will be worse.

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