05.20.10 Citi $EWG $ECB ..Can the European Stabilisation Mechanism Save the Monetary Union?

•The €750bn ESM could become a good holding operation for the Euro Area while it sorts out its fiscal unsustainability problems.
•Unfortunately, there is only €60bn on the table as yet — mere lunch money compared with the scale of the problem and the resources needed to discourage self-fulfilling speculative attacks on EA sovereign debt.
•So the ECB had to come in with outright purchases of sovereign debt.
•With the fiscal unsustainability problems unresolved and the ECB’s credibility weakened, the Euro Area is at a crossroads.
•Either a permanent, large-scale mutual fiscal insurance mechanism with rigorously enforced conditionality is established soon…
• …or the Euro Area could break up, dragging the European Union in its wake.




20100520 Citi Global Economics View希腊危机对欧元的影响