The relief in the markets is visible after the decisions of the Euro Summit. Is this a solution to the crisis? Of course, there are encouraging signs. Therefore, the planned recapitalization of the banks is desirable, but needs to be expanded (even – and especially so government bonds require capital requirements). The debt restructuring in Greece was required in this place long ago. The country really needed a depreciation in order to become competitive. Nevertheless, this path was blocked. In addition, renewed appeals to Spain and Italy (with the uncertain commitment of the local prime minister) to reforms are purposeful. The only question is how credible this kind of announcements are .
Less encouraging are the attempts of leverage
Neither the insurance solution nor the idea to include Chinese capital against possible aggressive demands of the Chinese government, are very promising. The sovereign debt crisis-stricken financial intermediaries be licking your fingers after about 20 per cent backed GIIPS bonds. There is also the risk that the trillion-dollar bailout of the reform pressure is reduced and this goes for all shaky candidates. The increase of the bailout levers again discipline role of markets. The debt crisis is only solved when the co-liability is terminated. As long as the taxpayers are liable for Greek, Portuguese, Italian, and eventually also for French and German problems, there will be no solution.
The next summit is sure to come
Then governments can fight for the causes and come up with credible sanctions review rules on debt and limitation of liability. Actually, it is not a model, which you can present the financial economy and the monetary system. In this respect, the adoption of a compulsory existing inflation is due to a lack of alternatives rather simple extrapolation of microeconomic market theory. There are scientific approaches that prove exactly this extrapolation as inadmissible. One is tempted to believe that academic economists were experts in economics. They are not. They are only experts in their own models. These, however, have repeatedly been shown to be false. The world economy is a chaotic system; the approach to the science is still trying to senior mathematics. The discrepancy between theory and reality is for every external observer is now clearly visible, but is ignored by the academic world completely.