… which should be good for another couple of per cent gains on idiosyncratic European and US stock markets.
There is a bit of debate here on second-guessing what the German finance minister “really” means about expanding the EFSF. That is, Schaeuble might be ruling out an increase in the volume of EFSF guarantees, but he would “really” tolerate levering its resources.
Thus allowing the bailout to roll on.
We’re not convinced. Under most proposals, the EFSF does have to provide further capital in order to provide a “safe” basis for levering assets into sufficient firepower, in addition to all the other tasks now being chucked at it. Which implies a capital increase. Above all, the comments above about monetary policy not being a “European way” (nonsensical as it seems, this is what Schaeuble really seems to think) suggest that the German government really will not tolerate levering EFSF resources via the ECB.
Related link:
The ‘No More Lehmans’ rally (and a mad EIB idea) - FT Alphaville