Price tag of solving Europe keeps going up and up and up. On the way to the superbubble that eventually ends civilization if they actually do this. (actually the fate may have already been sealed without them doing this) This is nothing different than what started WWII with all the cross guarantees of defense. Poland has a pact with Hungary and England has a pack with Poland and France has a pact with England. So if Hungary is attacked everyone declares war on everyone else. Except now you have financial bailout pacts.
This is from Bloomberg yesterday.
European policy makers may need to provide as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, said economists at Goldman Sachs Group Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.
With Greece’s budget turmoil infecting markets from Rome to Madrid, economists are urging German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and other officials to come up with unprecedented measures. Other steps could see governments guaranteeing bonds and the ECB abandoning collateral rules or reviving unlimited lending to banks, the economists said.
The extra yield that investors demand to hold Portuguese 10-year bonds over bunds rose 59 basis points to 277 points yesterday, the most since 1997, before slipping 3 points today. The spread on Spanish debt increased to the most in more than a year yesterday and the spread on the bonds of Italy, the euro region’s third-largest economy, was the highest since July. The premium on Greek bonds surpassed 8 percentage points.
“This is like Ebola,” Organization for Economic Cooperation and Development Secretary General Gurria told Bloomberg Television today. “It’s threatening the stability of the financial system.” The World Health Organization calls Ebola “one of the most virulent viral diseases known to humankind.”
Heck yeah, the virus is a perfect comparison because the financial system is so dang interconnected that someone like Greece who shouldn't matter at all holds the world hostage. So the fact we are too interconnected means the solution is to become more interconnected. Now that is Harvard like genius at its best right there.