Tightening the money supply is not going to help Greece, Portugal, Ireland or anyone else. It's a deathblow.
(Reuters) - The European Central Bank raised interest rates for the second time in three months on Thursday and signaled a further hike is likely this year to tackle inflation despite the intensifying euro zone debt crisis.
The ECB also offered help to hard-pressed Portugal after ratings agency Moody's downgraded its debt to junk status this week, pledging to keep providing it with liquidity regardless of ratings.Yes, after they've jacked up the rates. Gee, how magnanimous of them.
"Today's news conference has made crystal clear that the ECB remains geared toward further monetary tightening, despite the lingering debt crisis," said ING economist Martin van Vliet.
Although financial markets are anxious to know what steps the ECB might take if the euro zone crisis worsens further, Trichet repeatedly refused to discuss them and said he would prefer instead to discuss traditional monetary policy.
Leaving the news conference, Trichet said he hoped next month's briefing would focus primarily on monetary policy rather than "other issues."
Other issues? Are there other issues? This is the head of Europe's central bank. This is an astonishing comment.
With help like this Portugal is doomed.