EMERGENCY lending from the ECB to banks in Ireland fell in December, the first decline since January 2010, but only because the Irish Central Bank stepped up its help to banks.
The Irish Independent learnt last night that the Central Bank of Ireland is financing €51bn of an emergency loan programme by printing its own money.
Wow! This is desperate stuff, the ramifications of which are potentially enormous. It surely defeats the object of a single currency having individual member states printing money on a whim. What is now obvious is that the issue of Ireland and its bailout is far from over:
And it's not even clear that Ireland have permission to do this:
In hindsight, the attention of the market moving to Portugal or Spain was a misdirection of where the real attention needed to be, and that is Ireland still.
The bail out of Ireland, funded currently from their own retirement savings, has not been ratified by their government. The ECB has not started to poured funds from the Stabilization fund into Ireland yet, as they await ratification of the bailout.
The bailout, like a ticking time bomb has not been ratified yet, and if Fianna Fail’s 1 vote coalition collapses before the vote, all bets are off as to it ever being passed.
Ireland Central Bank was allowed, with or with out permission, to print up up new Euros without new sovereign debt issued behind them.As Ireland have now set a precedent will Greece, Portugal and Spain do the same? The inflationary pressures of doing so will greatly increase. So how will Germany react to this, given that they are obsessed with keeping inflation low at all costs for very obvious historical reasons.
The crisis affecting the Euro has just deepened.