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Tag Archive: European Stability Mechanism


Many have said that not all is not solved in the Euro-Zone. In fact, despite the ongoing rhetoric from the ECB that they stand ready to “do anything,” in reality they have done little to this point other than just talk the markets higher. While that has worked to a large degree to suppress rising interest rates on debt burdened Euro-Zone countries there has been no progress on the“unification” of the Euro-Zone or a resolution to its mounting debt problems.

Three Problems That Still Exist

There are still three major problems with the Euro-zone that, without fixing, will lead to the next chapter in the ongoing Euro-zone saga. Continue reading

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25 Lessons from CYPRUS

There are many lessons to be learned from the Cyprus bailout, and plenty of implications for how things may develop in imagesthe future. We list 25 here, but there are more.

Lesson 1: Do not underestimate the ability of the eurozone to do the right thing – after all the alternatives are exhausted;

Lesson 2: Eleventh hour deals can often lead to mistakes and have unintended consequences. The decision to haircut depositors under EUR 100k was a pothole the Troika fell into. It questioned the integrity of the EUR 100k deposit guarantee;

Lesson 3: The disappearance of Mario Monti from the scene has reduced the influence the South has on decisions about the future of the euro; Continue reading

Mario Monti, the Italian Prime Minister who spared the euro zone’s third-largest economy from all of Dante’s circles of 651345435hell, its sure destiny under his predecessor Silvio Berlusconi. It is another Mario – Mario Draghi, president of the European Central Bank.

Mr. Draghi, who was the Financial Times’s Person of the Year and lauded pretty much everywhere else (eclipsing Canada’s Mark Carney, the next Bank of England governor, if you can believe that) made two bold moves that removed the crisis’s rough edges.

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ECB Buying Back Bonds

 

The European Central Bank is preparing to unleash its financial might and buy government bonds to help drive down borrowing costs in debt-ridden countries like Spain and Italy, caught in the grip of what president Mario Draghi called a “worsening crisis.”

Draghi urged leaders of the 17 countries that use the euro to use their bailout fund to take the same action, sending a clear message: Europe’s financial crisis requires more forceful remedies than leaders have so far been able to muster.

The move towards bond buying came a day after the Federal Reserve hinted it was leaning toward further action to stimulate U.S. growth, highlighting the Continue reading

People celebrating in Spain. Could it be that we figured out how to repay the $125 billions we owe to Europe? Ah no… it’s football, again. Congrats Spain for winning the Euro 2012!

Reverting back to he EU submits in the words of Satyajit Das ” The Pavlovian response of financial markets to the European leaders’ summit of 28 and 29 June 2012 was remarkable. The frugal communiqué of 322 words fired the “animal spirits” of financial markets, which now believe that the European debt crisis has been “solved”. As comedian Robin Williams joked: “reality is just a crutch for people who can’t handle drugs. ” Continue reading

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