AFTER MONTHS of indecision, moves to set up a rescue mechanism for all euro countries are a huge leap into the dark for the European authorities. The development, which marks a capitulation to market forces, suggests EU leaders perceive a serious threat to the single currency in the turmoil unleashed by Greece’s financial crisis.
As a fully-fledged sovereign debt crisis in the euro zone draws closer, this is Europe’s “big bang” response. The rescue mechanism as framed would essentially enable distressed euro countries to draw special loans from the European Commission. In a separate but related development, the purchase of government debt by the European Central Bank (ECB) is also in prospect.
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