Flip-flop economics typical of the incompetence

When should a bust bank be liquidated? Answer: when it is Cypriot, but not when it is Anglo Irish.

The ECB/IMF/EC’s response to the ongoing banking crisis is a testament to its failed flip-flop economics. First bondholders could not be burned, now they can, apparently. Then banks could not be let go to the wall, now they can. Then the Greek rescue was a “once off special case”, then another and then another.

Once upon a time it was good for sovereigns (taxpayers) to pick up the debts of bust banks; then it was bad, and the decision came to separate bank and sovereign debt totally; then Ireland Inc was handed the debts of IBRC (Anglo) Bank and that was good apparently.