The EU is in trouble. Provided that it finds some cash or avoids a European Central Bank intervention, it is raising a firewall to assure ten percent of Spanish and Italian debt issues.
But that would recall an insolvency problem where there is only one liquid body. The secondary debt market would get more expensive and deepen the gap that exists between peripheral financing and remaining markets, condemning us to a toilsome spiral and the concomitant spending cutbacks.
And why ten percent? There is never a non-payment for as little and redemption priority would be given to the rest of the European states that are putting up funds.
This recipe would not transmit confidence to the markets and would swiftly taint France's credit rating. With bad ideas like this and a paucity of courage, it is not strange that the Greece agreement is in danger this week.
