The Euro deathwish

The struggling economies of the Euro Area periphery need an interest rate rise like a hole in the head. So what does the European Central Bank give them? An interest rate rise. Greece will default, and the sooner the better for the Greeks, the question now are the other PIIGS. Portugal's debt has been downgraded to junk, much to the whining annoyance of the Chairman of the ECB, because that is what it is. The ECB has decided to ignore reality and keep on accepting Portuguese debt as collateral and I expect that there will be many banks eager to take up the ECB's offer of taking the junk off their hands. But even junk has some worth, the next stage is for the Portuguese government to be pushed into the same position as Greece and have to default at which point the debt will be worthless. The ECB seems as determined to drive itself into bankruptcy as it is to bankrupt the states that use its currency.