Mamma mia!

The Eurozone debt crisis seems to be causing a few folks at the News International media outlets in the UK to become a bit unhinged. In The Times today there was a long, finger-wagging editorial saying that to solve the debt crisis, it would be necessary for Germany to overcome its qualms about inflation, and allow the ECB to print money and wade into the bond markets.

Meanwhile, over in the business section, editor Ian King was sounding off against the ECB for....getting involved in the market in advance of Thursday's Italian debt auction! (To the chagrin of doomsayers everywhere, this went surprisingly well, with a bid-to-cover of almost 2). According to Ian King, if any private company intervened in the market just before it issued securities, the people involved would very soon find themselves locked up. Which may be true, at least theoretically, but is of dubious relevance here. Every central bank in the world involves itself in securities markets around the time of new government issues, and in most cases is itself a bidder for the bonds that are being auctioned.

Apparently in Ian King's world, it's fine for short sellers to push up the yields on the paper in advance of the auction, but it ought to be forbidden for the ECB to intervene to keep the market orderly. It's not as if the ECB's action pushed the yields down so low that it caused investors to boycott the auction -- the healthy bid-to-cover is clear evidence of that. As I've written here in the past, ensuring that primary debt sales proceed smoothly is one of the main things that the ECB should be doing as it attempts to navigate its way through the crisis.

Maybe before the next Italian debt sale (next week!), Ian King and The Times editorialists can get together and decide whether they want the ECB to step up its involvement in the market or not. Possibly to help them make a decision, News International stablemate SKY News has recruited a new expert to explain the Italian situation. Step up, on today's "Boulton and Co." lunchtime news broadcast.....Nancy Dell'Olio! Yes, the permatanned, permapouting celebrity hanger-on herself, described on screen as a "former advisor to Silvio Berlusconi". Words fail me, though alas, they did not fail her.