ECB Crisis Management Is Half-Hearted

by Geoffrey T. Smith

Wall Street Journal
August 4, 2011

The ECB is back in crisis mode, but it may not have done enough at Thursday’s governing council meeting to stop the debt crisis spreading further still.

Traders confirmed that the ECB bought government bonds in the open market for the first time since March as President Jean-Claude Trichet held his monthly press conference. But the ECB appears to have undermined its own actions by being too half-hearted. Instead of buying Spanish and Italian bonds, those which are now at the focus of the crisis, it only bought Portuguese and Irish ones.

As such, it gave the impression that it is still not prepared to risk trying to support the huge debt markets of southern Europe’s two largest economies, for fear of finding out how many people want to sell. The task of supporting Italy and Spain, it would seem, is one for other euro-zone governments—when they get back from vacation.

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