"...as Trichet started to speak, his ECB troops stepped into the market to buy as many peripheral bonds as they could, particularly Portugal and Ireland. Started evidently in bidding for 10 -25 mln â‚¬ clips and then moved onto 100 mln â‚¬ clips â€¦ which is very rare indeed."
"Spain's former leader Felipe Gonzalez warned that unless the European Central Bank steps into the market with mass bond purchases, the EMU system will lurch from one emergency to the next until it blows up....
Arturo de Frias, from Evolution Securities, said the eurozone will have to move rapidly to some sort of fiscal union to prevent an EMU-break up and massive losses on €1.2 trillion of debt lent by northern banks to the southern states....The market will keep selling until the yields of Spanish and Italian bonds (and perhaps Belgian and French also) reach sufficiently horrendous levels. ("Mounting calls for 'nuclear response' to save monetary union", Telegraph)
"If Europe is going to "resolve" the current crisis in an orderly way, it is going to have to move very quickly â€“ not just for the obvious financial reasons, but for much narrower political reasons. I am pretty sure that the evolution of European politics over the next few years will make an orderly solution progressively more difficult.For ten years I have used mainly an economic argument to explain why I believed the euro would have great difficulty surviving more than a decade or two. It seemed to me that the lack or fiscal centrality and full labor mobility (and even some frictional limits on capital mobility) would create distortions among countries that could not be resolved except by unacceptably high levels of debt and unemployment or by abandoning the euro. My skepticism was strengthened by the historical argument â€“ no fiscally fragmented currency union had ever survived a real global liquidity contractionâ€¦...The eurozone is maneuvering itself into a position where it confronts the choice between two alternatives considered "unimaginable": fiscal union or break-up." ("The rough politics of European adjustment", Michael Pettis, China Financial Markets)
"The Irish "program" solves exactly nothing â€“ it simply kicks the can down the road. A public debt that will now top out at around 130 per cent of GDP has not been reduced by a single cent. The interest payments that the Irish sovereign will have to make have not been reduced by a single cent, given the rate of 5.8% on the international loan. After a couple of years, not just interest but also principal is supposed to begin to be repaid. Ireland will be transferring nearly 10 per cent of its national income as reparations to the bondholders, year after painful year.
This is not politically sustainable, as anyone who remembers Germany's own experience with World War I reparations should know. A populist backlash is inevitable. The Commission, the ECB and the German Government have set the stage for a situation where Ireland's new government, once formed early next year, rejects the budget negotiated by its predecessor. Do Mr. Trichet and Mrs. Merkel have a contingency plan for this?" ("Ireland's Reparations Burden", Barry Eichengreen, The Irish Economy)
"...given the debt burdens in the periphery, some combination of monetisation and default is the most likely eventual scenario for Europe. Ireland, for example, cannot grow nominal GDP at or above the 5.8% interest rate on offer under the bailout terms. Unless the country sheds its bank debt guarantee as I recommend, default is likely. Therefore, the ECB will have to step in or Europe will risk a meltdown and dissolution." ("Brynjolfsson bets on spread convergence...", Edward Harrison, Credit Writedowns)
"What should be done now? My ideal solution “from the perspective of the euro zone“ would be a common bond to cover all sovereign debt to be followed by the establishment of a small fiscal union; furthermore, banks should be taken out of the hands of national governments and put under the wings of the European Financial Stability Facility. That would clearly solve the problem.
If this is not going to happen, what can Ireland do unilaterally now?...First, Ireland should revoke the full guarantee of the banking system, and convert senior and subordinate bondholders into equity holders." ("Will it work? No. What can Ireland do? Remove the bank guarantee and default", Wolfgang MÃ¼nchau, The Irish Times)Sure, the experts know what needs to be done, but nothing will come of it. German voters will never support stronger ties with the other EU nations which they have already dismissed as profligate spenders. Nor will the other countries surrender more of their own sovereignty when they see how Ireland and Greece have been treated. That means, the EU is probably headed for the dumpster. And, maybe, that's a good thing. After all, behind all the public relations hoopla, the real goal of the EU was always to create Corporatopia, a place where bankers, business chieftains and other elites lined their pockets while calling the shots. Just look at the Lisbon Treaty fiasco back in 2008, when the EU's corporate Mafia used every trick in the book to push through an agreement that ran roughshod over basic democratic principles and civil rights. Fortunately, the Irish people saw through the ruse and sent the Treaty to defeat. Here's what a spokesperson for the "No Campaign" said at the time:
"The Irish people have spoken. Contrary to the predictions of social and political turmoil, we believe that hundreds of millions of people across Europe will welcome the rejection of the Lisbon Treaty. This vote shows the gulf that exists between the politicians and the elites of Europe, and the opinions of the people. As in France and the Netherlands, the political leaders and the establishment have done everything they could to push this through â€“ and they have failed. The proposals to further reduce democracy, to militarize the EU and to let private business take over public services have been rejected. Lisbon is dead. Along with the EU Constitution from which it came, it should now be buried."