First up, a couple of links from ZeroHedge:
Explaining How The Just Announced ECB Market Rescue Pledged 133% Of German GDP To Cover All Of Europe's Bad Debt
[N]ot only will the EFSF have to be expanded (that much was known), but that Germany, and specifically the outright economy, will be on the hook by an unprecedented amount of money. And expanded it will have to be: not by two, not by three, but by a cool four times, to a unbelievable €3.5 trillion. (...)But then: It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden. As the BBC says: All eyes are now on Merkel.
That means that Germany "contin[g]ent liabilities", in the worst case scenario where France again gets downgraded, and it likely will eventually, would surge to about €3.3 trillion, or an insane 133% of German GDP!
It's is hardly the fault of the German chancellor that others are in the cross-hairs of the bond market, but she is the one person who could disarm that market firepower. (...)Indeed, Germany has already stated categorically Italy can't be bailed-out. The money just isn't there.
It's not just about the Germans. The Dutch and the Finns know that they would be required to commit a similar proportion of financial and political capital, but only the Germans have the scale and status to take the lead.
The Telegraphs Philip Aldrick foresees the break up of the eurozone.
Having let the crisis get so out of hand, buying that confidence will not be cheap. In Germany, in particular, Angela Merkel may exhaust her remaining political capital if she throws more taxpayer money into creating a viable eurozone firebreak.And the CEBR is not alone. A poll released today shows that only 32 percent of the Dutch expect the euro zone to survive the current crisis. A majority of 56% deems a euro zone collapse inevitable.
Nick Bullman, managing director of ratings agency CheckRisk, believes the biggest risk now is that Germany, the Netherlands and Finland – the strong euro members – leave. A two-tier euro could emerge with the weaker nations on the old euro pegged to the stronger ones' new euro.
He is not alone. The Centre for Economics and Business Research has put the chances of the euro being in its current form in 10 years' time at just 20pc.
And if you are (or can read) Dutch: Over on DDS Hannibal has a good write up on this weekend and the possible end-game that is going to play out in the coming days.
The news that the European Central Bank presidents are having a teleconference on Sunday, seen in the light of the events [of last Friday], can only be explained as a first stock-taking of the essential procedures for the dismantling of the euro in its current form.And tomorrow? Tomorrow is going to be another Black Monday (NL).
[UPDATE001] Doesn't this just fit nicely into the clusterf.ck we already have on our hands: Ireland is now signalling their willingness to default. Others are now seriously arguing for Ireland to quit the euro. Austerity has failed.
[UPDATE002] Over on ZeroHedge: Joint Statement From Merkel And Sarkozy On Global Financial Crisis. Short version: We're sticking to the July 21st plan. No mention of ESFS enlargement. It's been decided then: Italy and Spain are too big to bail.
[UPDATE003] And here's your Sunday read (pdf): Europe on the Brink
[UPDATE004] Statement by the President of the ECB:
The ECB will actively implement its Securities Markets Programme.The ECB is going to buy up Spanish and Italian bonds after all. Merkel and de Jager caved. Again.
On the other hand, this seems to be a plan to buy time until September, when the documents mandating and installing the EFSF should be ratified by all member states. The market may not allow the EUnion that time.
Italian and Spanish debt will be bought up by the ECB, transferring privately held debt (by banks) to publicly held debt. That would be our money. This is a bail-out of the financial sector, nothing more, nothing less. And it doesn't change the end-game. It just makes the hurt a whole lot worse. Because there is no-one in the EUnion willing to face reality. Useless effing SWINE!
[FINAL UPDATE] AEP gives it three weeks.
If we are going into a global double-dip (defined as global growth below 2.5pc), [Italy and Spain] have no chance at all unless the ECB throws all caution to the wind, defenestrates the two German members from the 36th floor of the Eurotower, and embraces QE a l’outrance.
Germany might not like that.
I have a nasty feeling that nothing whatsoever has been resolved.