October 26, 2011
EU leaders gather today at 18.00 in Brussels to save Europe and the world one more time this year.
At lunch time the Bundestag has passed the EFSF motion with a large majority (good news). But the motion states that the European Central Bank will no longer need to buy bonds on the secondary markets, and that the rescue fund cannot be financed through the ECB (bad news). Especially for Sarkozy, who counted on ECB to keep his country’s triple A status in the perspective of the May 2012 Presidential elections in France. But now Trichet is gone and Merkel calls for ordnung.
There may be a mini-agreement on a Greek haircut of 50% and of a bank recapitalisation with the requirement for banks to have a core capital of 9%. But with Italy the sick man of Europe and not enough EFSF firepower to bail it out, I don’t even want to think about the reaction of the markets.
Leaders drive safely their national cars, carefully watching for election lights and poll signals. But with regard to Europe, we are in a crash test extravaganza. In which we citizens are the dummies.