Open Europe confirms our diagnosis of EFSF Chief's Insanity

Regling goes Loopy from the Open Europe Blog

This Greco-Finnish collateral deal is turning out to be quite the thorn in the side of eurozone leaders. As with all such problems, it has begun to attract all manners of solutions. One of the more interesting and outlandish ones was covered by Handelsblatt yesterday, reportedly put forward by none other than Klaus Regling, Head of the European Financial Stability Facility.

According to the German daily (although without citing sources) Regling has suggested to eurozone Finance ministers that Greece partly nationalise its banking sector and then use these bank shares as collateral with Finland in exchange for the Finnish share of the bailout loans. Sounds simple enough, although it has one slight snag – the collateral offered would be worthless in the event that the Greek state failed to repay the bailout loans.

Regling goes Loopy, is the headline to Open Europe's posting, see it all from here, and I really like their graphic, which I have therefore reproduced here. BUT let it not be forgotten that it was Ironies Too that was one step ahead with our own assessment of yesterday:

Will Collateral Damage Destroy the Euro? Become Anti-EU!

The head of the EFSF, see the link from my post of yesterday to guage this man's sanity, has just now suggested that Euro Group former nation's wishing to obtain collateral for further loans to penniless Greece, may wish to accept Greek bank shares as collateral. Given a choice between that and Scotch mist, I imagine the latter would be preferred as it would involve no negotiation or administrative costs!

The entire posting from 8:07 am on 31st August is linked here, it makes some important points on false euroscepticism.