Time the good boys play hard ball
Ireland needs to grasp any advantage it can as the crisis in the eurozone reaches the endgame, writes Colm McCarthy
THE resignation of Juergen Stark from the European Central Bank executive board last Friday is further evidence of the policy divisions in Europe. The rift between Germany and the ECB concerns the ECB policy of buying government bonds in the secondary market, and another German Bundesbank president, Axel Weber, quit the governing council in February last over the same issue.
If the ECB were to cease buying Italian bonds, in response to foot-dragging by Italy over budget reforms, the interest rates faced by Italy would rise steeply and force Italy out of the bond market, joining Greece, Ireland and Portugal in a bailout programme. The trouble is that Italy is too big to accommodate within the lending resources available to the EU and IMF.
Meanwhile, the second bailout for Greece, agreed (or apparently agreed) on July 21 has yet to be finalised and there is open speculation of an imminent Greek sovereign default, or even of a Greek exit from the eurozone.