ECB :Suspending minimum rating thresholds Portuguese debt

How would you as an analyst/PM assess this development in terms of the “soundness” of the ECB. Given that rating agencies are now suddenly finding religion is this move to preempt shocks that may arise due to possible downgrades of European periphery?

They’ve been moving thresholds for the downgraded debt for a while. I sort of expected them to do this. The tricky thing is that they seem to be saying they won’t take Greek debt if there is a default, so it’s a bit of a game of chicken with the EU to force a compromise.

Under the current proposal by the French (30/70 rollover)& the ECB is only window dressing and S&P has said that they would mark the maturing debt as in default. Till S&P came out with their opinion there was a lot of grand standing. Not sure what the compromise would be. Besides any compromise IMO would tantamount to lowering standards. Not that I am in favor of what the ECB is currently doing by accepting lower rated debt.

The ECB doesn’t care if they mark it as default. Trichet said in the press conference they will make their own decision.

If that is ECB"s stance then compromise is a moot point.