Financial Times
June 8, 2011
Rules are made to be broken. This is a confusing adage. If you do not want a rule followed, why make it?
Yet it is clearly a popular idea among the European politicians who are managing the sovereign debt crisis. When they bailed out Greece, Ireland and Portugal they did not merely do something that exceeded their powers, they violated an explicit prohibition on such bail-outs.
Now there is talk of the European Central Bank accepting Greek government bonds as collateral even if it is “restructured” (not repaid in full) or “rescheduled” (paid late). This would violate rules about what the ECB can accept as collateral. But it will be an easy step to take because by currently accepting Greek government bonds as security the ECB is already violating rules about the required credit quality of collateral. And, as another saying goes, you might as well be hanged for a sheep as for a lamb – especially when you will be hanged for neither. European politicians and bureaucrats suffer no punishment when they break the rules that they claimed would make the euro safe in their hands.
Of course, they claim that by breaking the rules they are acting in the interests of the European people. But such judgments ought to be irrelevant. We do not allow an ordinary citizen to decide when the laws against theft should apply to him and when, all things considered, it would be for the best if he stole someone’s property. A thief cannot evade conviction by arguing that he had a good reason to steal. Yet the dear leaders of Europe can and do pardon themselves by declaring the wisdom of their rule-breaking.
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