After all his tough bulldog talk over the years, the world can now see Trichet is in reality nothing more than a monetarist pussycat when the chips are on the line.

Let's recap.

Trichet Floods Banking System With Cash

October 08, 2008: Trichet Offers Unlimited Cash

European Central Bank President Jean-Claude Trichet said he can't rule out further interest-rate cuts after joining a round of global reductions today and offering to flood the banking system with as much cash as it needs.

So Much For Price Stability Mandates

What was it someone was telling me just two weeks ago? Oh, here it is: "Trichet will NEVER cut. The ECB has price stability mandates."

The person went out of his way to put "NEVER" in caps.

That's rather touching given that today the ECB made a 50 basis point in conjunction with global coordinated panic (see Global Coordinated Rate Cuts Won't Solve Economic Crisis).

ECB Waives Collateral Rules

May 03, 2010: ECB Comes to Greece's Aid by Waiving Collateral Rules; ECB Plays With Fire; Europe's Web of Debt

In a move that is supposed to stop contagion and inspire confidence, the ECB Comes to Greece's Aid by Waiving Collateral Rules

The European Central Bank joined the international rescue of Greece, saying it would indefinitely accept the country's debt as collateral regardless of its country's credit rating, underpinning gains in the bond market.

Today's decision was a reversal for ECB President Jean-Claude Trichet, who began the year saying the ECB would not change its "collateral policy for the sake of any particular country."

ECB Plays With Fire

This is a dangerous precedent that challenges the credibility of both the ECB and Jean-Claude Trichet.

Intermediate-term, the ECB's actions add more tinder to the woodpile. Spain and Portugal are the matches.

Rulebook Heads for the Window

May 03, 2010: Trichet May Rewrite ECB Rule Book to Tame Greek Risk

European Central Bank President Jean- Claude Trichet, who capitulated on a January pledge not to relax lending rules for the sake of one country, may have to sacrifice more principles to prevent Greece from bringing down the euro.

Trichet yesterday diluted rules for the second time in a month to guarantee the ECB will keep taking Greek government bonds as collateral for loans. The central bank may have to extend that to other nations, renew a program of lending unlimited cash to banks for a year, and even start buying government debt if the 110 billion-euro ($146 billion) bailout plan for Greece fails to stem the euro's slide, economists said.

The next response to a broadening loss of confidence in euro-area finances would be for the ECB to channel cash through banks, either by lending them more for longer in its regular auctions or by weakening collateral rules further, Deo said. Another option would be to accept bank loans to governments as security, he said.

The bank's policy makers may move as soon as their May 6 meeting in Lisbon to reintroduce unlimited three-month loans, Citigroup Inc. economists led by Juergen Michels said today.

The ECB may have to go even further and buy government bonds if it is to stabilize financial markets and avoid a return to recession as governments slash spending to appease investors, said David Owen, chief European economist at Jeffries Group Inc. in London. "There is a good chance the ECB will ultimately have to resort to quantitative easing," he said.

Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland, wrote in a report today that "markets should be alert to the risk of ECB bond buying, as early as today."

While the ECB is prohibited from buying assets directly from authorities, it can buy them on the secondary market. Trichet said on May 2 that "at this stage, we have absolutely no decision on the purchase of government bonds."

"No Decision" means pussycat-hearted Trichet is considering it.

I say consider it done. The market is very likely to force the ECB's hand after Trichet's tough bulldog talk failed to accomplish a thing other than make the ECB's pledge look silly.

By the way, whatever the ECB does to help Greece will not work. Worse yet for the ECB, Portugal and Spain are on deck.