Trichet Communes With Charlemagne Before Exorcising Lehman Ghost

Bloomberg
July 8, 2011

As European officials haggled over the latest solution to Greece’s debt crisis last month, Jean- Claude Trichet circled the 1,200 year-old marble throne of Charlemagne in the German city of Aachen.

Hours before Moody’s Investors Service raised Greece’s default risk to 50 percent on June 1, the European Central Bank president gazed at the symbol of unity used by the Holy Roman Empire’s founder and 30 of his successors. The next day, Trichet called for “historical perspective” when addressing the turmoil afflicting Europe’s common currency.

In his final four months in office, Trichet, 68, is battling politicians he sees as too ready to ignore the lessons of history and contemplate a Greek default, threatening the euro project he helped create in three decades at the pinnacle of global finance. With Greece’s fate still in play, Trichet may need to show similar resolve to August 2007 when he opened liquidity taps after the collapse of three BNP Paribas SA funds.

“In the same spirit he showed at the start of the crisis in 2007, Trichet’s the only one talking about big initiatives,” Jim O’Neill, chairman of Goldman Sachs Asset Management, said in an interview. “Others are happy to try and keep it together, whereas Trichet wants a more durable, longer-lasting union. It will come but I wouldn’t assume the path isn’t messy.”

More