Guardian
September 27, 2011
What is the new rescue plan?
There isn't one. This is a wish list dreamt up by Tim Geithner, US Treasury secretary, along with possibly the UK and more than likely some emerging nations. In Brussels they say it's "wildly premature" to talk of a multitrillion-euro bailout fund and an "orderly" halving of Greece's €315bn debt within the six-week deadline set by Geithner and George Osborne.
OK, but what's all this about €2tn?
EU officials know the current plans to stabilise the eurozone and resolve the sovereign debt crisis don't cut the mustard with the markets. So there's feverish talk of raising the bailout facility's financial firepower to €1tn, €2tn – or even €4.5tn (roughly ten times what's now available). One idea is to leverage this firepower by effectively turning it into a bank, which, armed with a triple-A rating and access to virtually unlimited European Central Bank capital, could lend money to countries in trouble. By distancing the ECB from these loans this would overcome political hurdles – notably in Germany. Another idea mooted is to bring forward by a year – to July 2012 – the date for turning the EFSF into a permanent European Stabilisation Mechanism and, ultimately, European Monetary Fund. French president Nicolas Sarkozy and several thinktanks like the EMF idea. Another idea is for an orderly default on Greek debt of 50%. But that will be resisted by bondholders (largely banks) who in July agreed a 21% "haircut".
More
No comments:
Post a Comment