Financial markets are desperate to be bailed out, with the support of Tim Geithner, in his capacity as ambassador for US investment banks. The decisive action they all seek is not really a European solution at all. It is that the German government should write very large cheques – or underwrite very large borrowings.
Whenever you assert responsibility for issues you do not have authority to tackle, you risk a crisis of credibility that undermines the authority you do have. Europe’s leaders see themselves as mustering resources for a war with the markets: a war which they will lose, not just because they will never find sufficient resources to defeat the markets, but because they are really fighting reality. [The full article here. Behind subscription firewall]
In a sense, John Kay responds on behalf of Mario Draghi to Martin Wolf
Vasan Shridharan is a very astute follower and analyst of financial markets and a good friend. He ‘consults’ for a leading international and successful global macro hedge fund. This afternoon, in one of our regular conversations on financial markets, he said something very funny and profound at the same time:
European leaders do not like the problems they face nor do they like the solutions.