Wall Street Journal
April 4, 2011
Let's do a thought experiment: assume that all goes as planned by euro-zone policy makers. German Chancellor Angela Merkel recovers her balance and stops nickel-and-diming the various rescue funds being set up to succor troubled euro-zone members. Let's assume that all of the countries that have promised to contribute cash to the new €700 billion (£996 billion) European Stability Mechanism (ESM), scheduled to begin operation in mid-2013, cough up their shares of its callable capital, and that all of them—including Greece, Portugal, Ireland and Spain—prove able to respond if they are called on to meet billions in guarantees.
Let's assume further that Greece figures out how to collect taxes, and succeeds in reducing its deficits, as it promised when handed bail-out money. And that its banks, holding some €77 billion of Portuguese IOUs, somehow survive the new euro-zone plan to have creditors share the pain of bank bailouts.
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