Plan for a Plan Needed in Europe by 12/9
This quote from CNBC's website struck me as hilarious (in an end of the world sort of way).
Germany and France are exploring radical methods of securing deeper and more rapid fiscal integration among euro zone countries, aware that getting broad backing for the necessary treaty changes may not be possible, EU officials say.
The 12/9 Summit is the latest "solution date". As though anyone thought a credible solution was in the works at this point, it is becoming clear that the Eurocrats have no idea what they are going to do. As this saga continues its important to note that modifying treaties, instituting absurd austerity plans, and leaking rumors of Chinese assistance only buys time.
Sovereign yields and botched auctions indicate that stress in credit is only building (Note: implosion is approaching). Markets could give Richard Koo's Euro QE or some other coordinated program the benefit of the doubt as being credible. The only problem? Germany doesn't have any interest. As we've progressed from Greece to Ireland to Portugal to Italy to Spain to France, Germany is going to hit the eject button before attempting to pull out of this nose dive.
Merkel Rejects Euro Bonds from Bloomberg
Euro bonds are “not needed and not appropriate,” Merkel ..... She said euro bonds would “level the difference” in euro-region interest rates. “It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.”
More work needs to be done? On what? Germany clearly has no interest in co-signing a loan for their fiscally inept neighbors, and looks as if they are focusing on saving themselves while participating in all the conference/summit song and dance.
The impact on financial institutions is clearly going reverberate globally (seen BAC trading lately?), but its about time the markets solve this situation by forcing the inevitable 'licks' to be taken. Haircuts, right downs, capital raises, defaults. These countries are going to start fending for themselves. That is the 'answer' and it is becoming clear.