Trichet: “Après moi, le déluge”?

Is Trichet setting the stage to be the next Louis XV, who is said to have uttered the famous phase “after me, the deluge”?

Trichet has been a very vocal proponent of expanding the EFSF ans today suggested that the fund could be used for recapitalizing banks in addition to the controversial suggestion that it be allowed to buy up the outstanding debt of weak Euro area members.

Why is Trichet pushing for such an activist bailout mechanism? The skeptic in me says he wants to offload all the ancillary support mechanisms that the ECB has had to put in place to support the banks and the weak sovereign credits to the EFSF so that he can focus on monetary policy, ensuring his legacy as an inflation fighter. No more bond buying, or long-term fixed rate repos to zombie banks pour moi!

Trichet’s term is up at the end of October, so he will have to push hard in the next few months to bolster the EFSF if we wants to push through a rate hike before he leaves office.