Liquidity as a Tool of Coercion
That is how the Fed sees its role, but the ECB evidently has other ideas about this liquidity tool. Whether a country's banks are allowed to "access monetary policy operations" is seen by the ECB not as mandatory but as discretionary with the central bank. And as a condition of that access, if a country's bonds are "below investment grade," the country must be under an IMF program -- meaning it must subject itself to forced austerity measures. According to ECB Vice President Const ncio at the same press conference:
[W]hen a country has a rating which is below the investment grade which is the minimum, then to access monetary policy operations, it has to have a waiver. And the waiver is granted if there are two conditions. The first condition is that the country must be under a programme with the EU and IMF; and second, we have to assess that there is credible compliance with such a programme. [Emphasis added]
Liquidity is provided only on "adequate collateral" -- usually government bonds. But whether the bonds are "adequate" is not determined by their market price. Rather, political concessions are demanded. The government must sell off public assets, slash public services, lay off public workers, and subject its fiscal policies to oversight by unelected bureaucrats who can dictate every line item in the national budget.
Tankus observes:
Europe now has a system where liquidity and insolvency problems can occur and can be deliberately generated (at least in part) by the central bank. Then the Troika can force that country into an "IMF program" if it wants to continue having a functioning banking system. Alternatively, the central bank can choose to simply "suspend convertibility" to the unit of account [i.e. cut off the supply of Euros] and force the write down of deposits [haircuts and bail-ins] until the banks are solvent again.
Pushed to the Cliff by the Financial Mafia
Were liquidity and insolvency problems intentionally generated in Greece's case, as Tankus suggests? Let's review.
First there was the derivatives scheme sold to Greece by Goldman Sachs in 2001, which nearly doubled the nation's debt by 2005.
Then there was the bank-induced credit crisis of 2008, when the ECB coerced Greece to bail out its insolvent private banks, throwing the country itself into bankruptcy.
This was followed in late 2009 by the intentional overstatement of Greece's debt by a Eurostat agent who was later tried criminally for it, triggering the first bailout and accompanying austerity measures.
The Greek prime minister was later replaced with an unelected technocrat, former governor of the Bank of Greece and later vice president of the ECB, who refused a debt restructuring and instead oversaw a second massive bailout and further austerity measures. An estimated 90% of the bailout money went right back into the coffers of the banks.
In December 2014, Goldman Sachs warned the Greek Parliament that central bank liquidity could be cut off if the Syriza Party were elected. When it was elected in January, the ECB made good on the threat, cutting bank liquidity to a trickle.
When Prime Minister Tsipras called a public referendum in July at which the voters rejected the brutal austerity being imposed on them, the ECB shuttered the banks.
The Greek government was thus broken Mafia-style at the knees, until it was forced to abandon its national sovereignty and watch its public treasures sold off piece by piece. Suspicious minds might infer that this was a calculated plot designed from the beginning to throw Greece's prized assets onto the auction block, a hostile takeover and asset stripping for the benefit of those well-heeled entities in a position to purchase them, including the very banks, hedge funds and speculators instrumental in driving up Greek debt and destroying the economy.
No Sovereignty Without Control Over Currency and Credit
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