Posted on 08/09/2012 6:15:45 PM PDT by Ernest_at_the_Beach
Last week, European Central Bank President Mario Draghi laid out the framework for the next developments he wants to see in Europe.
Considering how important the ECB has been in slowing the crisis, it is likely that the ECB will get what most of what it wants.
Draghi's demands are just a few of the many steps European leaders will need to take in the medium-term in order to keep the monetary union afloat.
Depending on the time frame for these developments, we could see more sovereign debt restructurings and bailouts.
Here are the next steps to look for:
1. EU leaders need to sort out seniority problems in holdings of distressed sovereign debt.
Official European institutions (for example: the ECB) have bought up sovereign bonds of troubled countries like Greece, Portugal, Ireland, and even Spain and Italy in an attempt to keep their borrowing costs down. However, the fact that these official creditors did not take losses when Greece restructured its debts in March signaled to investors that official creditors had become de facto senior bondholders while private investors had become subordinated.
This subordination discourages private investors from buying more sovereign debt from countries they believe could default. One of the major ways that the ECB and EU bailout funds can mitigate financial tensions is by purchasing sovereign bonds, but Draghi is refusing to do more of this before these seniority problems are resolved.
"I think they have to take losses in Greece to get real trust in Spain," Lawrence MacDonald, bond trader and author of "A Colossal Failure of Common Sense," told Business Insider Friday. Greece still has too much debt, and a new plan will likely include another debt restructuring, which the official sector could take part in. More on this in step three.
(Excerpt) Read more at businessinsider.com ...
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fyi
Also, thanks for correcting the link on that other thread.
surprise, surprise
ain’t none of this going to work.
whenever one country (greece, spain,italy)
is spending another country’s money (germany) It never turns out well.
The longer people wait, the more pain.
Gosh, a few u.s. politicians could learn this lesson as well.
Varys by websites....but it screws up links real good.
Gets to be a pain to clean up.
No it sure doesn’t remain a far-off prospect. Plenty of horse-trading going on behind the scenes to make it happen in spite of the will of the people. And it’ll be an even bigger abomination than the status quo.
In order to fix this crisis, what really needs to be done is for the USA to go into Brussels and arrest everyone in the Berlaymont Building. Next step is to be brave enough to go into Frankfurt and arrest everyone in the European Central Bank. Those two moves will throw the Euro-fanatics off-balance long enough to thwart their ambitions.
9 steps, all of which are worthless. Most of which simply won’t happen. Can’t happen. Couldn’t fix anything if they did.
This piece of economic gobbly gook is pure crappola smothered in gravy thick denial. None of it faces up to what the problem is and how it came to be.
This is a perfect illustration of why the whole house of cards is going to crash in a very ugly way.
None of this sovereign debt can or will be repaid. There are going to be defaults on scales barely imagined of. It CAN’T be fixed. The focus now should be trying to engineer an orderly crash, if such a thing is possible.
The people running the EU are absolute lunatics. They should be incarcerated and pumped full of anti psychotic medications.
Those 9 won’t work,
The only thing that will save Europe & America
1) Dump Socialism
2) Deport all 3rd worlders back to the 3rd world
3) Have more babies
Most of it is nonsense. You can’t explain away simple math. There isn’t enough money to pay off the current debt let alone the looming underfunded pensions. Simply, the socialists have finally run out of other peoples money!
All nine points are basically “Move the pea to a different shell”.
The one thing that is absolutely essential for the European crisis to end is the one thing they will refuse to do until they are forced, kicking and screaming, at gunpoint, to do:
The governments must quit spending more than they collect in taxes.
P.S. - Same rule for the US.
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