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Bankers condemn ECB purchase of Greek bonds

DDP/The Local · 30 May 2010, 13:51

Published: 30 May 2010 13:51 GMT+02:00

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According to a report in news magazine Der Spiegel, bankers at the Bundesbank see no reason why the ECB has chosen to buy state bonds of heavily indebted countries like Greece, when a multi-billion-euro rescue package has already been agreed.

The report says the ECB has already spent nearly €40 billion on these government securities, including €25 billion on Greek bonds, while eurozone countries recently signed a rescue package for Greece worth around €110 billion, some €22 billion of which will be contributed by Germany. A common rescue fund for eurozone countries is in the process of being set up.

The bankers complained that by buying the Greek bonds, the ECB was keeping their price artificially high, and other banks, notably French ones, were consequently using the opportunity to sell their Greek bonds in order to clean up their finances.

The report claims that some high-ranking German bankers suspect a French conspiracy, saying that ECB head Jean-Claude Trichet, a Frenchman, had been put under pressure by French president Nicolas Sarkozy to break one of the ECB's golden rules – never to buy government bonds from member states.

The purchase of Greek bonds by the ECB does not serve German interests for two reasons. Firstly, Germany has a 27 percent stake in the ECB, and therefore carries some of the risk, and secondly German banks are not allowed to sell their Greek bonds to the ECB, having made an agreement with German Finance Minister Wolfgang Schäuble to keep them until May 2013.

Story continues below…

A spokesman for the Bundesbank denied the magazine's claims, but refused to comment further.

DDP/The Local (news@thelocal.de)

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Your comments about this article

14:37 May 30, 2010 by Fruitkok
If I have to choose between trusting on Berlin or Paris it is clearly Berlin. No matter what happened 60 years ago, the French have proven to be the rats of the European project. Having this guy Axer Weber as the president of the ECB will be a relief for the whole of North-Europe. We pay, so we decide.
19:18 May 30, 2010 by HANNIBAL-BARCA
The world is in a economic funk at present. The obstinate members of the Bundesbank typify German pedantic ism. Greece is a member of the European Union, least we forget what a "union" is. The E.U. Central Bank must take decisive action to reassure the markets that NO E.U. MEMBER WILL DEFAULT. Though this may prove a fools errand, it remains a necessary though not sufficient measure.
00:00 May 31, 2010 by Prufrock2010
"First we take Manhattan, then we take Berlin." (Leonard Cohen)

I'll go with Paris any day.
12:36 May 31, 2010 by William Thirteen
@Prufrock2010 are you suggesting that LC is acting as GS puppetmaster?
06:09 June 1, 2010 by derExDeutsche

Care to explain how a song about the Rotte Armee Fraktion has anything to do with this article?

it Seems to me that group would be akin to your political leanings. But I still don't get the connection.

Gotta love Leonard Cohen though.
00:27 June 2, 2010 by Prufrock2010
The song isn't about the Red Army Faction. Listen to it.

And you don't know jacksh*t about my political leanings.
03:15 June 2, 2010 by derExDeutsche
sorry, bud, I may have it wrong, it was Jennifer Warnes who used the Red Faction Army in her Cover of the song.

Leonard Cohen himself is quoted

¦quot;I¦#39;m not sure of what it means right now because I had this long voyage from Chicago. I think it means exactly what it says. It is a terrorist song.¦quot;


¦quot;Ever succeeding moment changes what has happened the moment before. In the stream of writing, all that is written changes its meanings by what is written subsequently. "First We Take Manhattan" might be understood as an examination of the mind of the extremist. In a way it¦#39;s a better song now than it was before and I would probably sing it in concert if the circumstances were appropriate.¦quot;

Jennifer Warnes uses in her cover version of the song, (in German)

'"Regarding the assassins resposible for the attack on the German-Arabian Society in Berlin, the police have made some progress..." speaking of Red Army Faction
18:07 June 3, 2010 by pmach
No we don't gotta love Leonard Cohen what a depressing schmuck. Like he has any relevance to this article. Nobody would put it past Nicolas Sarkozy to break ECB rules as he is simply a little freak of a man who will get whats coming to him in the end.
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