European Council President Herman Van Rompuy says 25 of 27 EU member states will sign off on the European Stability Mechanism rescue fund. The U.K. and the Czech Republic are not supporting the fund, which will go into effect after 12 nations ratify it, Van Rompuy says. The ESM will replace the European Financial Stability Fund. [View news story]
this doesnt solve the key problem which the market is really concerned about right now, Greece. That being said, you can interpret this msg as EU pays more attention to the aftermath of Greece, thus signals that Greece may fail in the near future.
it will be interesting to see how this thing turns out eventually due to all the mixed signals in the markets. It seems like EU officials including those from Germany have again and again assure the market that EU will not break apart and Greece will still be a part of the union. Now the two things I worry about if/when Greece breaks away from EU is the following, 1. CDS. CDS is not just an insurance. It is a very complicated contract and no one knows exactly how much the total payment will be until all hell breaks loose, 2. other PIGS members. The bond market will hit'em hard, especially Portugal. Judging from last year's experience, the spread will again widen and markets will shift their attention to the next EU victim. Higher interest rates lead to higher debts, higher debts lead to another haircut.
Schrodinger's Cat In Athens [View article]
European Council President Herman Van Rompuy says 25 of 27 EU member states will sign off on the European Stability Mechanism rescue fund. The U.K. and the Czech Republic are not supporting the fund, which will go into effect after 12 nations ratify it, Van Rompuy says. The ESM will replace the European Financial Stability Fund. [View news story]
BBC Says Merkel Says Greece Will Default [View article]
Is Greece Leaving The Eurozone? [View article]
1. CDS. CDS is not just an insurance. It is a very complicated contract and no one knows exactly how much the total payment will be until all hell breaks loose,
2. other PIGS members. The bond market will hit'em hard, especially Portugal. Judging from last year's experience, the spread will again widen and markets will shift their attention to the next EU victim. Higher interest rates lead to higher debts, higher debts lead to another haircut.