The late-night decision on 4 February by the European Central Bank to reject Greek bank collateral for monetary policy operations will, I confidently predict, precipitate not just a run on Greek banks; not just greater price instability across the Eurozone – but ultimately, the collapse of the fantastic machinery that is the ‘self-regulating’ economy of the Eurozone.
As is well known, the primary duty of the ECB is to promote price stability. Subject to price stability it has a duty to promote the union’s Treaty objectives that include:
balanced economic growth… full employment, social progress and solidarity amongst member states.
Neologism of the week award goes to the Financial Times for coining the term ‘Japanisation’ as a shorthand description for current economic trends in Europe and North America.