Under the stewardship of Mr. Trichet the ECB seems to have neglected one of its major duties: to monitor the national accounts of Euro-countries and to analyze where a country’s cash comes from and where it goes. In the case of Greece, 199 billion EUR left the country (net) from 2001-10 out of the ordinary course of business (exports plus services minus imports). Foreign debt increased by 288 billion during this period. Not the state was the largest user of foreign debt; the private sector (mostly banks) used a significantly greater amount. At December 31, 2010, the government’s foreign debt was “only” 187 billion EUR out of the total of 409 billion EUR.
Up until 2008, the foreign debt was used – more so than financing the budget deficit – to finance a phenomenal level of imports (2008: imports of 64 billion EUR compared with exports of 20 billion EUR). Since 2008, capital flight to the tune of 50-70 billion EUR was financed additionally.
The first question a banker must ask when he receives a loan request is: what will the money be used for? Dear Mr. Trichet, you will go down into history for not having noticed the above developments. Above all, you will go down into history for having sent ECB-money to Greek banks so that wealthy Greeks could transfer their own money out of Greece!