It's truly amazing that bond rating agencies are taken at all seriously anymore.

http://blogs.telegraph.co.uk/finance/jeremywarner/100008620/stranger-and-stranger-grows-the-eus-bailout-fund/

You made me laugh with your "shared brain"!

I htink they are misleading, and muddling on purpose. But as you say markets are slow, herd creatures easily spooked but with short memories and little imagination.

Your book just pooped through the letterbox 5 minutes ago. Looks great! Now to get reading….

Thanks

Rob

"Any new [bailout] mechanism would only come into effect after mid-2013 with no impact whatsoever on the current arrangements." (Finance ministers' statement)

"Current arrangements", what can that be other than the EFSF (and/or IMF)?

Sounds deliberately misleading when implying that before mid-2013 all sovereign Euro debt is guaranteed against default.

Well, markets were calmed. Their shared brain is easily calmed and easily alarmed, and it will require new soothing words the coming week also….

nice to hear from you again. I think they could well need help before 2013. So all the more reason to starting bullying the bond holders now. Then if, as is likely, Spain does need help sooner you simply change the date and move it up top when you need it.

As for "shock and awe", they simply can't do it. Certainly not with the EFSF. Although it was trumpeted as €700 billion, because of the way it is set up they cannot spend anything like that much. And cannot spend it as freely as they might pretend. If they do they lose the EFSF's AAA rating, which weakens the EFSF over all.

The EFSF is not like the TARP. The TARP is a big fund, fairly easily accessed. The EFSF is set up very differently.

So I don't think they can simply back stop everything with it. That is why various groups in Europe are talking about setting up a European version of the IMF. A sort of EMF.

Europe does not want teh IMF involved if it can help it. An EMF would avoid that. BUT none of them can agree on who would control an EMF. So it is to be seen if they can get one set up.

In short it is still a terrible mess. The pressure on the bond holders is a good step, in my opnion, and in the mean time there is the solace that all the default rumours are weakening the Euro against the dollar undoing all of the FED's efforts.