Breakingviews

Euro zone’s bailout funds face biggest test yet

July 11, 2012

The EFSF’s 6 bln euro bond issue has eased concerns it may struggle to raise debt. Yet the fund and its successor, the ESM, will soon have to recapitalise Spain’s banks, and maybe rescue Madrid and Rome. With the vehicles themselves constantly evolving, that could prove tricky.

Europe needs to ease on firewall obsession

March 26, 2012

Euro zone members may agree this week on beefing up their rescue fund. But throwing money at the crisis won’t solve it. A bailout of Italy and Spain would be tricky, however big a firewall. And Italy’s crisis last year shows that market forces may be more efficient than bailouts.

Governments are now world’s financial engineers

November 30, 2011

The crisis exposed the trouble with complex leverage games in the private sector. But Western authorities, undoubtedly abetted by bankers, have embraced high finance for everything from housing to Europe’s rescue fund. Such finagling, however, is harder in tough markets.

from Hugo Dixon:

Don’t leave Plan B too late

By Hugo Dixon
November 28, 2011

Germany is still determined to try its current plan for solving the euro crisis, though it has little chance of working. It had better spend time and effort readying a Plan B when, not if, Plan A become insufficient to halt the crisis.

Europe can protect itself against a Greek default

By Hugo Dixon
September 26, 2011

The rest of Europe can and must protect itself against a Greek default. A three-pronged plan is required: 150-200 billion euros to recapitalise banks across the region; extra liquidity, again for banks; and a beefed-up bailout fund to help Italy, if needed.

How Europe can get more bang for its bailout buck

September 22, 2011

Europe's bailout fund is no longer fit for purpose. As the euro zone's sovereign debt crisis has spread to Spain and Italy, the 440 billion euro fund looks increasingly puny.