Chillin' out till it needs to be funded
Germany’s protestations have shifted to the threat of a “fiscal union” with as many terms and conditions as possible on the budgets of member countries and frequent inspections and veto powers to European (German?) administrators, points to the simple facts winning yet again albeit three years too late for Europe.
Apparently the situation 12 months later will look thence something like this: ( avoiding markings of the Grexit options)
– The 17 Euro countries would have a loose banking union so that a group guarantee is made available to investors on borrowings, yet each Central Bank would independently manage the debt issuance and other monetary policy not on the common charter including supervision of the banking sector activities
– Eurobonds will be available on tap and before we say a credit line for national banks like Rajoy mistakenly assumed in his statement on Sunday, the monies from the Eurobonds will be allocated to member states as per their requirement and per the T&Cs signed on any fiscal compact. This could be a little differently as the EU troika and satraps approve each Central Bank’s Eurobond issuance programme ( aart from any common programs issued by the ECB) They would also not be collateralised but work as collateral providing a fresh infusion to the banking system that desperately seeks collateral everywhere to the point that banks issue new debt to themselves to print for collateral
– The Euro would be trading in the same range. Euro GDP would be still contracting but 2014 projections for a balanced budget ould stay and at least 4 nations ( not the four bailed out) will be publishing positive GDP data
Of course none of it will actually happen like this as each Euro state remains wedded to an anachronism of national polity and central stances that have survived the Hellenic summit games from Ireland to Greece ( the Hellenic state) to Portugal and Spain. And there in perhaps lies the rub of the fiscal union as requested by Germany. That of discipline and committed to austerity. Of course ithout Eurobonds and some groth spending to rival the QE2 program, the Europe state will unlikely ever come out of the crisis.