Huffington Post
August 23, 2012
Thank you Germany, Italy, Spain and, especially, the European Central Bank. They all said enough to provide markets and investors with a tranquil August so far. The question now is whether they will be able and willing to pivot -- from reassuring words to the series of actions required to enable this tranquility to grow deep roots.
Let us start with some key facts. By the close on July 25th, Europe finances were at a critical level -- again. The yield on 10-year Spanish bonds had surged to 7.3%, rendering the country's debt dynamics highly unstable; and it was probably only a matter of days before it would have lost market access.
With Spain tottering, there were concerns that Italy could not be that far behind. Accordingly, the 10-year yield there had risen to 6.4 percent, fueling concerns that it too would eventually need a bailout.
Such recourse to European funding packages by two of the eurozone's largest economies would have probably overwhelmed creditors' willingness to lend. It would have also undermined the economic and financial fabric of Europe's historic economic integration initiative.
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