Yesterday we reported that the latest deus ex machina in the endless European bailout was to proceed with IMF monetization and failing that, just a narrower US-funded bailout of Europe. That ain't happening.
- German Chancellor Merkel says the G20 failed to agree on IMF resources
- German Chancellor Merkel says will make sure that the IMF has sufficient resources, but also new instruments
And it gets worse:
- German Chancellor Merkel says hardly any countries in G20 have said they will participate in the EFSF
Which means we are back to the old and now expired fallback deus exes: China and the magical, wonderful and totally unfunded EFSF. No wonder the EURUSD is dropping on the news, as for the BTP-Bunds spread, well, following the Merkel announcement that Italy has to come under IMF monitoring, see below...