The real bailout of Greece comes from the ECB

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From today’s Open Europe news summary:

Greece set for next tranche of bailout funds as another strike brings country to a standstill The European
Separately, the euro working group meeting today, is expected to approve the release of the next €2.8bn tranche of bailout funds for Greece, due at the end of the month.Kathimerini Kathimerini 2 FT WSJ Kathimerini 3

The next tranche of bailout funds for Greece is merely a shadow of the total support coming from the European Central Bank in the form of TARGET2 credits.  The balance sheet of the Bank of Greece shows a one hundred billion euro liability to other eurozone banks, an amount that has grown from almost nothing ten years ago.  The Bank of Greece buys Greek debt and uses it as collateral for euro borrowing from the ECB.  There is no practical limit to this borrowing; the other members of the eurozone have voted to allow the ECB to lend unlimited amounts to support its members national central banks.  This places the concept of charity on its head; i.e., the recipient gets to decide how much he wants rather than the contributor deciding how much he wants to give.  Patrick Barron

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