The smoking gun is found.
The smart guys, me not included, knew this would happen.
This policy allows the ECB to flood the EC with fresh cash as it buys worthless Greek bonds - at par - from bankrupt Greek banks.
So much for ECB discipline. Sometimes my naivete amazes me, too.
I can see the lines forming.
Spain will now sell bonds to the public and Spanish banks.
The bonds will fall in value as reality takes hold.
Then, the ECB buys them at par.
Three? Who's got number three?
Be patient. There's plenty of cash for everyone.
* * * * * J B K * * * * *
San Francisco
The European Central Bank joined the international rescue of Greece, saying it would indefinitely accept the country's debt as collateral regardless of its country's credit rating, underpinning gains in the bond market.
The decision came less than a day after Greece agreed to a 110 billion-euro ($145 billion) package of emergency loans from the International Monetary Fund and its euro-region allies. Under the plan backed by the ECB, Greece pledged 30 billion euros in budget cuts to bring a deficit of 13.6 percent of gross domestic product within the EU limit of 3 percent in 2014.
"The ECB is a key player in the rescue package designed to help Greece and it is clearly buying insurance against the likelihood of further multiple downgrades of the Greek debt, something that might lead to a halt of ECB financing to the Greek banks," said Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc in London.
http://www.bloomberg.com/apps/news?pid=20601068&sid=aTAygysllnxM
