The hard men of the Bundesbank gave a devastating critique of the Merkel bail out plan for the Greeks. A plan cobbled together without consulting the national central banks which would lead to the monetisation of debt. That is central bank speak for printing money! It brings problems in respect to stability policy that should not be ubderestimated is a BU quote.
The BU is a genuinely independent central bank. Can you see Mervyn King criticising a Gordon plan so trenchantly? The so called BoE independence was another Gordon deceit par excellence. He appoints the Governor, the Deputy Governors, the external MPC members and has to approve the other two internal Bank nominees on the MPC. No Gordon controls the BoE but the myth of independence comes in useful when blame has to be dished out elsewhere which is a Gordon trademark.
The BU is independent because following two horrendous melt downs in 1928 and 1945 leaving the German currency worthless the German people simply do not trust politicians with their currency. The BU was set up to resist political pressure and has done so in the past. When sterling got kicked out of the EMU in 1992 John Major asked the German Chancellor to support sterling with German reserves. The then German chancellor pointed out to JM it was not in his gift, that would be a BU decision! The BoE is simply a fig leaf to disguise Gordon's embarrassment and has, and will, cave in to the UK PM when required as he is the man who makes the top BoE appointments. Ambitious men are the easiest to manipulate as my old civil service mentor said!
The BU will take no prisoners or any Trojan horse from the Greeks. They will call the shots on this not Dr Frau Merkel.
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